Au Jibun Bank investment app: changing hearts and minds

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With the global outbreak of the COVID-19 pandemic, governments and individuals need to take further actions to mitigate risk and minimise transmission while maintaining social and economic activities. People have been forced to change the way they live in ways never imagined, which is to adapt to this “new normal”.

Japan has been no exception. People now see their future more with uncertainty and have learnt from 2020 that our future is not something predictable.

If you look at the retail finance sector in Japan, there was a certain change as well around the same time. More people started to invest in stocks in 2020, just like in the US and in the UK. Number of newly-opened accounts at five major Japanese internet securities firms, from January to September, doubled in 2020 year-on-year.

There could be various reasons behind this trend: bull market environment; coronavirus financial aid programmes; digital transformation within the securities services industry utilising smartphones; the Nippon Individual Savings Account (NISA) offering with its preferential tax treatment for individual investors (NISA is the Japanese version of UK’s ISA, launched in 2014); and, last but not the least, people have more time to think about investments and to plan for the somewhat uncertain future in their stay-home lifestyles.

You may think this investment boom in Japan is similar to what’s happening in the US with the Robinhood app, however, the background is a little different in terms of people’s feelings from historical perspective.

Cash has been king in Japan for decades

According to the Japanese government, Japanese households have little interest in investing in financial instruments, preferring deposits and savings with very little understanding of the effectiveness of long-term diversified investment in other financial instruments.

The Financial Services Agency (FSA) noted in its 2016 report that savings and deposits accounted for around 52% of Japanese households’ financial assets (compared with 24% in the UK and 14% in the US). There is a deep-seated distrust among Japanese people towards the stock market due to the aftereffects of the bubble economy, which collapsed in 1991.

It has been said that for Japan to attract individual investors to the stock market, not only it is necessary to remove this distrust, but also for the individuals to find pleasure in money management. Looking at how people flocked to opening accounts at securities firms in 2020, it seems they’ve started to find some fun there.

The brand-new app content that au Jibun Bank released in May 2020 certainly contributes towards this sentiment.

App to make money management fun, powered by AI

In the middle of the pandemic, au Jibun Bank embedded unique content into its app, called AI Japan Market Forecast.

The artificial intelligence (AI) based analysis of the stock market (Tokyo Stock Price Index: TOPIX) and the economic indicator figures derived from monthly surveys such as Purchasing Managers’ Index (PMI, compiled by IHS Markit) has enabled the banking app to show the five-day and one-month forecasts of the stock market, with daily and monthly updates, respectively, which users can check for free.

With a simple user interface (UI), people can track the latest market forecasts, which could not have been brought by usual technical market analysis, nor by big data analysis of the stock market data only.

It was made possible by utilising image recognition technology provided by the bank’s partner AlpacaJapan, a technology start-up with advanced AI expertise, and also by analysing the PMI figures (regarded in the market as an early indicator of the GDP statistics). This tool is known as au Jibun Bank Japan PMI.

Au Jibun Bank created these new tools to help users better understand where the economies and markets are headed. This is a unique approach for a leading mobile bank in Japan with a full banking licence.

This content is motivating the app users to think positively about building up their assets for the future.

The percentage of the tool’s correct daily forecast ratios was over 64% in October to December last year. As the AI engine improves by analysing charts accumulated on daily basis, the accuracy is, too, expected to improve further.

Banking app as a lifelong partner

In addition to the AI Japan Market Forecast capability, au Jibun Bank keeps accelerating its activities to attract the beginner investors.

In March 2021, the bank opened its forex trading services to non-account holders by providing a “forex demo trading” capability (forex trading is traditionally considered “difficult” by most beginner investors).

By trading virtual funds, users can experience forex trading in a simulated environment. They can then also open their own forex account, and do it smoothly thanks to the bank’s recently launched “simple mode UI”.

Another newly introduced feature is a connected service for users to buy investment trusts through their banking app, thanks to the API connection with au Kabucom Securities, an online brokerage firm.

Users can rely on the rankings of popular investment trusts and start investing easily through au Jibun Bank’s one-stop-shop banking app. They can also check their total asset size, including cash deposits and investment trusts.

Au Jibun Bank believes that the improvement of education for individual investors is a basic element to encourage more people to invest in risk assets and/or start thinking of asset-building for their sustainable future.

It important for the bank to provide the information about financial instruments in an easy and transparent way – and also to promote the availability of this information – so that users understand it and apply it successfully.

Au Jibun Bank aims to become the lifelong partner for every customer, providing straightforward and friendly touchpoints.

By Chisato Nakamura, manager, innovation business division, au Jibun Bank Corporation

Au Jibun Bank’s AI Japan Market Forecast project won in the Best Use of AI category at the Banking Tech Awards 2020.