New Medium–term Business Plan: Progressive Development of "One MIZUHO" —The Path to a Financial Services Consulting Group
Outline of the New Medium–term Business Plan
Beginning in fiscal 2016, Mizuho began to implement its new three–year medium–term business plan, entitled Progressive Development of "One MIZUHO" —The Path to a Financial Services Consulting Group.
In addition to an uncertain regulatory environment, financial institutions face a number of challenges affecting the business environment. These include approaching a turning point in the global economy marked by instability in the economic structure under which emerging markets were the drivers of growth and by prolonged stagnation in natural resource prices, as well as the appearance of game–changing factors such as the rapid development of financial innovations. The new medium–term business plan seeks to establish a new business model for the financial industry in light of these business environment changes.
Specifically, we will further reinforce the "customer first" principle (customer–focused perspective) that we promoted in the previous medium–term business plan. At the same time, in response to the challenging business environment, we will pursue "operational excellence" as part of a project to promote greater improvements and efficiency of our operational processes.
Under the new medium–term business plan, Mizuho will perfect the "One MIZUHO Strategy" by creating a new business model as a "financial services consulting group" based on the foundations of the "customer first" principle and operational excellence. The new medium–term business plan sets forth what Mizuho aims to become in the medium–term through the implementation of 5 basic policies and 10 basic strategies in three areas. In the 10 basic strategies, the plan indicates what must be implemented with a focus on business strategy, financial strategy and management foundations.
Mizuho's operations are the actions that we take to fulfill the goals of the "One MIZUHO Strategy." By pursuing "operational excellence," we will make our operations more efficient, take the four elements of operation, namely: speed, quality/accuracy, cost and sustainability, to a higher level, differentiate our "customer first" strategy from those of our competitors and enhance the added value of our services, which will lead to establishing a sustainable competitive advantage.
To accomplish this, we will thoroughly review our existing business processes, and will work to share and standardize operations supporting the integrated management of banking, trust banking and securities functions as well as both domestic and overseas operations. In addition, we will incorporate technological innovation such as Fintech and new ideas. Through these processes, Mizuho will aim for improving operational efficiency and enhancing value for customers through raising the sophistication of its operations.
Accordingly, we have newly formed our Operational Excellence Promotion Committee, which is chaired by the Group CEO, and will promote these initiatives across the Group.
Five Basic Policies
1. Introduction of the In–House Company System
To further strengthen our "customer first" approach, on April 1, 2016, we introduced an in–house company system based on customer segments. The aim of this system is to leverage Mizuho's strengths and competitive advantage, which is the seamless integration of Mizuho's banking, trust banking and securities functions under a holding company structure, to speedily provide high–quality financial services that closely match customer needs. Previous to this transition, under the former business unit structure, the units were organized across several entities and each specialized in serving specific segments of customers. Further pursuing this concept, the in–house company system allows for the organization to take stronger, faster, and more consistent action according to the attributes of each customer during all processes from the formulation of strategy to its execution.
Specifically, Mizuho has established the following five in–house companies, each covering a different customer segment: the Retail & Business Banking Company, the Corporate & Institutional Company, the Global Corporate Company, the Global Markets Company, and the Asset Management Company. This new structure strengthens our "customer first" (the market–driven) approach.
In addition, we reorganized our product and research functions into two independent units, to enhance expertise and promote the group–wide utilization of these functions. The Group's research & consulting functions have been consolidated into the Research & Consulting Unit as "One Think Tank," thereby creating an ensemble of experts dedicated to helping customers develop solutions to any issue they may be dealing with.
From the view of implementing an effective management structure based on customer segments, we have introduced ROE as a performance indicator for each in–house company and have made it clear that the heads of these companies have responsibility for profits and have delegated necessary authority for this purpose.
Based on the Group's risk appetite policies (basic policies regarding the Group's risk–taking), Mizuho is working to increase profitability and reform its risk–return structure. We are also endeavoring to streamline our head office operations and implement speedy decision–making processes to further enhance the Group's front–line business and sales capabilities.
2. Selecting and Focusing of Business Area
Mizuho has clarified areas of focus and areas to streamline based on attractiveness of the respective markets and its competitive advantages. With a view to improving profitability, becoming even more customer focused, and optimizing business promotion, we are working to improve profitability by streamlining and revisiting strategies and reallocating management resources into areas of focus.
- *1Including risk–weighted asset equivalent amount
- *2Relatively illustrating the increase/decrease prospect of the major policies on a three–step basis as of May 2016
3. Establishment of a Resilient Financial Base
We are endeavoring to strengthen profitability by improving risk–return and controlling expenses and, to achieve a stable profit structure and create a robust financial base, Mizuho is accumulating additional capital and aiming for reforms that will establish a resilient financial structure.
4. Active Involvement in Financial Innovation
Technological advances such as "Artificial Intelligence" and "Big Data" are opening up new opportunities that may be game changing for a wide range of financial service fields. Working together with selected third party Fintech companies, Mizuho looks to offer products delivering improved and new customer value.
5. Embedding a Corporate Culture that Encourages the Active Participation of Our Workforce to Support a Stronger Mizuho
With objective of creating a sustainable competitive advantage, Mizuho is continuing its initiatives to make major reforms in its human resource management and strengthening its activities to establish a strong corporate culture.
Financial Targets for Fiscal 2018
Under the new medium–term business plan, Mizuho has established the following financial targets for fiscal 2018, which will be the plan's final year. These are to establish a stable profit base, create a robust financial base, and transform into a resilient financial structure.
(Financial Market Assumptions for FY2018) 3–month TIBOR: 0.05%, 10–year JGB: 0.30%, Nikkei 225: JPY 19,000, Foreign Exchange Rate (USD/JPY): JPY 122
- *Group aggregate