Banks across Japan trial the iBank index to spur growth

Financial institutions across Japan test a new fintech-powered system to stimulate corporate growth while working to improve the banking sector and reinvigorate the economy.

Kiyotsugu Yoshihara, Ph.D. CEO of Data Lupe and Researcher at Kyoto University, is leading a revolutionary trial to use a new index to create innovative business services that could help transform the Japanese banking industry.

As an esteemed professional with a distinguished career across academia and finance, Yoshihara is working on a cutting-edge solution called the iBank Index. It aims to enhance integrity while increasing profits for financial institutions nationwide.

This article closely examines the iBank Index's potential to revive corporate growth in the Japanese economy through its data-driven fintech capabilities.

What is the iBank Index?

The iBank Index is a transformative concept designed to evaluate financial institutions based on their contributions toward client development rather than traditional metrics. This ranking system assesses the financial institutions on their contribution to a company's successes and failures, demonstrating how beneficial each bank is to its business customers.

The new index recognises banks that improve the performance of their clients. Not on the bank side.

By combining the corporate financial data of Tokyo Shoko Research with this theory, Yoshihara was able to identify and analyse good trends and poor performance across multiple types of banks and credit unions nationwide. In addition, he proposed utilising this indicator not only for public interests in finance but also for private businesses, thus allowing institutions to achieve an ideal balance between profit-making opportunities and societal contributions.

An innovative approach to stimulate Japan's business sector and national economy

In 1986, Japan experienced its peak year of business activity with over 5.35 million companies established; however, since then, the number has steadily dropped to a concerning level. This decline indicates that the Japanese economy is at risk of declining and needs additional stimulus.

As a highly esteemed former executive officer of Japan's largest Shinkin Bank, Yoshihara has made it his mission to use his new iBank Index as a catalyst for reinvigorating and stimulating Japan's banking industry, thereby facilitating business and economic growth. He has taken it upon himself to lead the trial across the entire financial sector of Japan to show that banks can be one of Japan's most compelling drivers for development.

Which organisations are supporting the iBank Index?

The impact of Yoshihara's groundbreaking research has been so profound that it managed to captivate multilateral organisations such as the Asian Development Bank (ADB), which went on to publish his work. The iBank Index has also received support from Japan's Financial Services Agency and is patented under Yoshihara’s registered number, 6754107.

Although the Japanese Ministry of Finance is not directly involved, it remains devoted to safeguarding the stability of banks through six indicators, which one must mention. One such measure is profitability, which is essential to ensuring the long-term success and security of banks and their clients. But as necessary as it may be, its scope only extends toward banking operations without any influence on other businesses outside those walls.

How does the iBank Index unlock a new era of self-regulation?

In essence, the iBank Index could considerably streamline Japan's Ministry of Finance by introducing a fintech-powered ranking system to provide greater transparency for banking institutions. This innovation could help financial institutions and businesses make better-informed decisions.

The iBank Index could also allow banks to measure their performance against their peers, reexamine their strategies, identify potential risks and rewards, and ultimately improve the customer experience within the industry. It enables self-regulation by giving banks the power to assess their performance and those of their competitors.

It is a system that could be repeated worldwide, enabling banks to understand their market position better, make smarter decisions, and boost customer satisfaction. It would also help banks protect their customers from systemic risks by allowing them to assess the impact of their decisions on a broader scale.

Why does the iBank Index harness the ESG criteria?

Banks are an essential part of any business owner's financial journey. Still, it can be challenging to identify which ones are dedicated to investing time and resources into helping these small to medium enterprises (SMEs) succeed.

Yoshihara is stoking an inspiringly competitive atmosphere between banks whilst providing valuable data on tried-and-true paths to success that others can replicate. He aims to create a more open financial system by challenging the commitment of each bank to environmental, societal, and governance (ESG) principles to empower customers for more remarkable achievement.

Regional finance faces disruption from advancing technology, leading to rapidly converging markets worldwide and blurring distinctions between them. It raises questions about their continued relevance if banks fail to keep up with this pace of change.

Customer centricity is essential for the survival of financial firms; the iBank Index incentivises banks towards this goal. Banks must move beyond traditional management indicators to remain competitive and embrace change. Moreover, integrating ESG initiatives into an institution's evaluation system can be used to respond to the changing needs of customers.

The bottom line

The iBank Index is a tool that could transform banking by leveraging an ESG-based approach through the power of visibility. It allows financial institutions to view their performance levels, inspiring a more competitive environment as each establishment strives to be the best in the financial sector.

By taking advantage of the latest advancements in financial technology to create a real-time index based on accurate data, legacy financial institutions can integrate that information into their services and stay competitive with the ever-changing market. It allows them to remain relevant and even at the cutting edge of their industry.

Through this endeavour, Yoshihara anticipates that banks can promote sustainable economic development and construct a more financially inclusive system in Japan. He is hopeful the iBank Index will offer valuable insights for both banks and their beneficiaries, paving the way to a better future for the financial industry.