Initiatives Addressing an Aging Society (Dialogue FY2011)
Stakeholder Dialogue 2011 Initiatives Addressing an Aging Society
As Japan faces a rapidly aging population, it is increasingly important that we work to achieve a society in which everyone, regardless of age, gender, or disability, can fully participate and lead worthwhile lives. The employees of Mizuho Bank and Mizuho Trust & Banking participated in a discussion to examine what Mizuho, as a leading financial institution, can do, and what we should focus on in helping to make a barrier free, universal design–oriented society a reality.
Policy Division for Universal Design
Ministry of Land, Infrastructure, Transport and Tourism
International University of Health and Welfare
Director, HealthCare Business Generalization Headquarters
Nichii Gakkan Campany
Participants from Mizuho
General Manager of Corporate Banking Planning Division, Mizuho Bank (Currently general manager of Trust Business Department, Mizuho Trust & Banking)
General Manager of Private Wealth Management Business Planning Department, Mizuho Trust & Banking
General Manager of Corporate Communications
Mizuho Financial Group
Head of CSR Promotion Office, Corporate Communications
Mizuho Financial Group
To open the dialogue, Yoshihisa Kasahara, general manager of Corporate Banking Planning Division at Mizuho Bank, and Shigeru Takeda, general manager of Private Wealth Management Business Planning Department at Mizuho Trust & Banking, provided the assembled experts with a summary of their respective products and services in response to Japan's aging society.
Initiatives by Mizuho Bank
In its corporate customer business, Mizuho Bank is promoting three major initiatives in response to our aging society.
The first is through our financial products. The Mizuho Heartful Loan (released in May of 2010) and Mizuho Heartful Private Placement (released in December of 2010) programs certify companies that proactively hire the aged and those with disabilities, or that provide products and services to such individuals, as "Heartful Companies," and provide them with working capital and equipment funds under terms more advantageous than usual.
In the approximately one year since its initial release, we have executed approximately 800 Mizuho Heartful Loans, totaling approximately JPY 166 billion, while Mizuho Heartful Private Placement contracts number approximately 100 after six months or so, totaling approximately JPY 20.5 billion, making both of these products significant hits. This has resulted in a highly motivated sales force, and we hope to continue supporting our Heartful Companies by further enhancing the quality of these products.
Our second initiative also involves our "heartful" theme, through a series of Mizuho Heartful Forums, business gatherings to which we invite individuals representing companies in various industries. Two have been held to date, with between 50 to 80 companies participating in each. By supporting ties between companies in disparate industries, we hope to create opportunities for development of businesses targeting the elderly, including nursing care, meals, and delivery services. A number of deals have actually been concluded.
The third initiative involves customers positioned in growth industries, ones of increasing importance such as health care and nursing, which we are aggressively providing with support in the form of financing and services, with the goal of establishing Mizuho as a robust brand in the health care and nursing fields.
Initiatives by Mizuho Trust & Banking
To strengthen its response to an aging society, Mizuho Trust & Banking is focusing on "Asset Inheritance" utilizing its trust functions.
Our leading "Testamentary Trusts" products allow customers to entrust the bank with a will which outlines how their assets are to be distributed to the next generation. When the actual inheritance takes place, the bank then acts as executor, providing services to assist with disposition and distribution of any assets.
Other products we are focusing on is our "Asset Inheritance Trusts". These trust products involve entrusting the bank with the customer's financial assets, under a contract in which the customer specifies a method of payment in advance. Should the customer subsequently suffer from dementia, the trust bank can manage and pay out the funds required to provide for the customer's daily needs.
In this way, Mizuho Trust & Banking utilizes its trust functions to provide a range of unique services not possible for regular commercial banks. However, because we currently have a limited number of branches, our trust services are not yet widely known. To help close this gap between potential customers and our trust services, we are now working on a plan to strengthen our alliance with Mizuho Bank, which has over 400 branches in 47 prefectures nationwide. Today, Mizuho Trust & Banking has a little less than one million customers, with approximately 13,000 testamentary trusts on file. At the same time, Mizuho Bank has approximately 25 million customers, and depending on this alliance, we could potentially provide our services to ten or twenty times as many customers as we do today.
Providing financial products and services in response to the aging society is an imperative for companies going forward, and there are still many things we can do utilizing our trust functions. We are working to develop and spread the use of our products with that important social mission in mind.
What is important is that products and services in response to an aging society become universal
That is a brief overview of our business initiatives and other measures. We'd like to now ask each of you to contribute your own opinions to the discussion. Mr. Takahashi, may we start with you?
Responding to an aging society, and corporate social contributions in general, involve using surplus corporate profit to resolve social issues. As aging and other issues create significant changes in the structure of society, bringing a non–profit approach to such social contributions may in fact be the best way to gain a grasp of society's most leading–edge needs. Because social contribution activities can act as a kind of antenna, they can provide feedback that can be of significant value to a company's primary business. We shouldn't look at it as "social contribution is social contribution, business is business." This might be a somewhat abstract way of putting it, but I would like to see companies develop philosophies and methods that create a hybrid between social contribution and business. In that sense, I think discussion about trusts is a good example of how the social contribution concept can be tied to actual business. Earlier, it was mentioned that Mizuho has nearly 25 million individual customers. If even 1% of them make use of the testamentary trust service, that alone would represent a significant market. I think it is important to consider how to cover such demand; such social needs not only with the testamentary trust services, but across the entire retail sector.
In other words, an approach that works to resolve social issues can also broaden possibilities for business.
It not only broadens the possibilities for business, it can change the very nature of society itself. Interestingly, the number of elderly today is around 14 million, but that number is expected to double by 2025. Last year, the National and Regional Planning Bureau of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT)—where Mr. Toui, who is with us today, works—prepared a forecast for 2050, which predicted that, in the midst of continuing urbanization, much of the framework on which we have built our assumptions will begin to weaken. Since my involvement in that work—which some refer to as the "society of collapsing assumptions"—I have come to believe that it's important for companies, as well, to consider the possibility that what they had thought to be true may, in fact, not be so. Look at the issue of ATMs, for example. Some elderly customers may forget their PIN numbers, and bank tellers expend considerable effort providing services to such customers. But what will banks do as the number of elderly continues to increase, as it becomes an everyday occurrence for elderly customers with mild dementia to visit their local banks? What will banks need to turn what is now an extraordinary service into a normal, everyday service? Recently, we've seen a number of banks install at least one wheelchair–accessible ATM, and going forward, I think this kind of accommodation will become an ordinary thing.
Allow me to get involved here since the discussion has turned to barrier free issues. The so–called New Barrier–Free Law (the Law for Improving Accessibility for the Elderly and Disabled), which is under the supervision of MLIT, started with initiatives targeting infrastructure for the disabled and the elderly. The law itself uses wording like "Improving Accessibility" but the philosophy that represents our end goal is universal design, which I believe stands for the goal of creating a new society. These kinds of laws are one engine which will drive the building of universal services and a universal society, and we are using them to promote the development of the necessary infrastructure.
Our response to an aging society, then, should not be a matter of extraordinary accommodations or measures, but an everyday thing, part of the shift towards universal services and a universal society.
This may be somewhat off topic, but I believe that products and services categorized as being for wealthy seniors may also be a target for universalization. We talk about elderly in general, but in fact today there is a growing population of well–off seniors, probably more in Japan than in any other country. According to Kosuke Motani, the author of Defure no shotai (The real face of deflation), Japan likely has the highest number of well–off seniors worth more than JPY 100 million in the world. And they are found not only in the big cities, but in rural areas as well. Mr. Kitamura's company focused its business on this segment quite early on.
As Mr. Toui mentioned earlier, while barrier free infrastructure may have provided an entry point, I've experienced firsthand how indispensable these efforts have become to companies in the development of business. Looking at our own example, when the Heartful Loan program first began, we positioned it as a special loan, and frankly never expected it to reach JPY 100 billion in sales, so the initial budget was set up on the assumption that we'd be lucky to sell 100 such loans in a year. Imagine our surprise when we ended up closing contracts with 900 companies, worth a total of JPY 180 billion. This really made me realize that today, virtually all companies are involved in barrier free and other similar efforts.
It's really striking that so many companies are beginning to reveal so much latent need. The more companies that take advantage of the Heartful Loan program, the more they can develop their own initiatives, enhancing the image they convey to society. That, in turn, provides a model for other companies to emulate in their own efforts, further spreading the effect across society as a whole. In the Omi region they refer to the "three goods"—what's good for the seller, good for the buyer, and good for society—and this is clearly one of those "three goods" projects. I hope success models like this one will be publicized as widely as possible.
Banks that provide financial services, both at the individual and corporate level, deal with individuals from a wide range of fields and professions. And in principle, bank accounts are available for anyone to use. This is what makes it possible, when introducing new services, to approach customers without any apparent need and let them know that "these kinds of services are available." In that sense, I think we need to introduce our products and services for seniors, such as our asset succession trusts and testamentary trusts, to a broader range of customers. Conversely, I think we can also introduce our customer to services that are available but may not necessarily be something we provide ourselves. Take, for example, the services for the elderly provided by Nichii Gakkan. I'm sure they make a direct approach to customers with specific needs, but I think it's the bank's job to introduce and match customers with latent needs to such services. Whether individual or corporate customers, I think this is one of the unseen functions not found in a bank's article of incorporation.
Looking at train stations, there are slightly fewer than 10,000 stations nationwide. Making all of those stations barrier free requires financial resources. This is why, over the past ten years, we have focused first on making the most heavily utilized stations–those with more than 5,000 users per day–barrier free. Today, that effort has extended to 2,800 stations. We offered companies to make an effort only with subsidies, but many of them waited around to see if they would actually have to do something, with the result that the first two or three years saw a budget surplus, with only 2 to 3% growth during that time. After four or five years, however, that growth accelerated to 5%, 6%, then 7%. This is the point at which I think general awareness really started to change. This example applies to barrier free efforts in the transport industry, but I think the growth in loans that Mr. Kasahara referred to is perfect proof that society's awareness has also begun to change. If this phenomenon is taking place across a range of sectors and fields, I feel it marks a major new current.
Our use of the Heartful Loan program is exactly what this loan program was intended for, to provided services for the disabled and the elderly, and in that sense, it's a good fit with our business. And as a corporation, we use this kind of funding to invest in constructing senior housing and private nursing homes that may cost several hundreds of million dollars each to build. Not all of our business is based on such construction. In some cases, we may ask the landowner to build senior housing on their property, which we then lease back from them, paying out lease rent for a period of 30 years or so. Naturally, such owners tend to have fairly large pieces of property and considerable assets, and while senior housing is generally condominium style and qualified for bank lending, that may not be the case for smaller projects such as day care facilities. So while landowners may want to cooperate in supporting the public welfare, there are mis–matches along the way, and I think you would find a broader market if the target for such loans was widened somewhat, or if other benefits could be made available to certain borrowers.
That issue of subleases raises the question of how to handle this new way of putting private assets to work for the public good. More abundant shared public resources mean greater abundance for the individual as well. While the discussion of what financial institutions should do to make this possible is an important one, to date, unfortunately, I haven't arrived at a satisfactory theory.
I didn't explain this at the outset, but currently we are working with wealthy customers who fall somewhere between our individual and our corporate customers—particularly those with significant real estate holdings—to propose ways of enabling them to utilize their landholdings effectively. In the past, "effective utilization" usually meant building rental apartments, but recently, more customers have been building senior homes and care facilities, and we have been providing loans for such projects. And, in the case of subleases backed by well–regarded firms such as Nichii Gakkan, because we can do a proper cash flow estimate, we can work with them to develop proposals. In fact, this is one of the strategic businesses being promoted by our Wealth Marketing Division, which was established last year. I think by tying what we've just heard into our "heartful" business, we can develop an even more effective business, one with greater depth.
This means that there's still a considerable gap between supply and demand in this market for response to an aging society. If demand exists, supply–and the means to provide it–will follow. But these moves remain limited, and there is still room for further efforts on the part of private financial institutions, but also by national and local governments and business owners as well. A flow of capital needs to be created that meets the pace of aging.
Initiatives that add "heart" to facilities and services
This takes us off topic a bit, but I'd like to take this opportunity to make an announcement. I'm pleased to announce that Mizuho has been named a recipient of the 4th Award for Promoting Barrier–Free by MLIT . My congratulations.
Actually, the initial proposal suggested giving the award to a specific rural branch office. When we showed the proposal to the panel of judges, however, they felt it went way beyond that level, so at the last minute we had the application re–submitted, and decided to name the entire company to receive the award. There were three key points to Mizuho's winning this award. First was the organization–wide initiative known as the Heartful Project. Second was the fact that their standards focused not only on facilities, but incorporated the service side as well. And third, the fact that the project incorporated a universal philosophy. I believe these are what led to Mizuho being so highly rated. We tend to focus on buildings and other infrastructure. In the past three years, award recipients have included public facilities, airports, stadiums, and certain NPO activities. I think it's a significant milestone that this year, we've recognized a bank that provides essential social infrastructure on a nationwide scale, and that the award recognizes its services as well. I often have discussions with people in the transport industry, and they say that it is not enough to just install elevators and escalators. What's needed is a responsive workforce. So I hope Mizuho will share with everyone the fact that their initiatives are highly regarded by society, and use that to go on to create a positive spiral.
The services side requires repeated training. This award will only push us to devote ourselves further to that effort.
One other thing I'd like to say regarding the word "heart." At MLTI, we often discuss things in terms of either hardware or software. But the "soft" side of the barrier–free issue is tied not only to hardware, or infrastructure, but relates also to worker responsiveness, and further, to the national awareness as a whole. We've always referred to this as a "barrier–free heart," and so I was struck by how closely Mizuho's use of the word "heart" hits the target. I would also like to emphasize that no matter how lucid your words and concepts might be, actual execution is always more difficult. And I speak from experience, since just the other day we received a complaint regarding our own mistake of the "heart." We had recently established new barrier–free goals, and posted the policies on the Web to elicit public comment. Naturally, we posted the document in PDF format. Almost immediately, we had a phone call from a visually impaired user. He said, "I am visually impaired, and voice recognition software can't read PDF files. Hadn't you known this?". Our efforts had clearly lacked heart, and it was just about at that time that Mizuho was being awarded for its "Heartful" initiative, so the event really left an impression on me. We hope to use this award as an opportunity to be more proactive in supporting efforts to expand Mizuho's initiatives in facilities, services, and the "heart" to people in other types of businesses.
- *Established in 2007 to recognize the efforts of individual and organizations who have made a significant contribution to promoting barrier–free access in the national transportation sector, with the goal of encouraging widespread adoption of outstanding initiatives.
It is important to see that the "heartful" concept firmly takes root in society as a whole
I'd like to ask for your opinions about what efforts should be made to further strengthen our response to an aging society going forward.
I'd first like to thank Mr. Toui for his comments earlier recognizing the fact that our Heartful Project is an organization–wide initiative. Looking at it from that viewpoint, I think Mizuho could broaden its efforts even further by bringing that same orientation to the company as a whole, tying it in as a philosophy underlying a wide variety of products and services. We deal with a range of products, from the Heartful Loan program to the trust products mentioned earlier, but by orienting them all on the same "heartful" axis, I think we can create a sense of unity, which in turn generates enormous power, changing the way things are and even society itself.
In providing products and services to customers, an employee's wish to do something useful for his or her customer can significantly affect quality at the actual operational level. This is why building a basic awareness of aging and other social issues among employees, through training or whatever means necessary, can create a completely different impression among our customers even if we are providing products and services that are similar to those of our competitors.
It was mentioned earlier that by 2025, we will see the number of seniors double. I think this will change the priorities by which our corporate customers judge their businesses as well. As a bank, we need to have a firm grasp of those changes, based on improved employee awareness, to build our business. That's what I feel is important.
Mr. Kitamura spoke earlier about utilizing property. Using the function of a trust, you might, for example, put the land in trust, uncoupling the management burden and returning a certain set amount. It's certainly possible, and it's the kind of proposal we should be taking advantage of Mizuho's networks and customer base to promote. I feel there are still a great many things we need to do, and a great many things we can do.
What's needed is an approach to providing comprehensive lifetime services, services that support establishment of a sustainable infrastructure and lifestyle. Banks tend to be looked at as mere keepers of the safe, but Mizuho has brought to that image their "heartful" concept. This is a significant advantage, and one I hope Mizuho will utilize to the fullest. There was a time when rationalization was all the rage, and many financial institutions began downplaying their role in making regular rounds of their customers, but in a sense, it is through these seemingly irrational, apparently wasteful activities that many real needs can be found.
Another thing that needs to be considered is that we need to develop a broader consensus regarding what kind of society we will become as the number of elderly continues to increase. Each field may have its respective ideas, but the question is what kind of society we are looking at in the mid– to long–term. Looking at recent Cabinet surveys, a large number of even the elderly say they want to continue working. Surveys by MLTI have turned up many responses from people who wish to live in more walkable communities. Walkable communities require three essential elements: hospitals, supermarkets, and financial institutions. These are considered by far the three most important components, and I think Mizuho, with its "heartful" concept, can take the lead in building communities in response to these needs. For example, I was really impressed to find that at Tokyo Metro's Toranomon Station, Mizuho Bank's Toranomon Branch shares part of its property for use by the above–ground exit for the elevator from the station. In the case of subways, installing an elevator can sometimes be rendered technically impossible because the land above is a road, or a narrow sidewalk. Given those many challenges, even a little cooperation on the part of people like you can make an enormous difference in comfort for those of us who live and work in the community. Transportation is considered derivative demand—without a destination, no demand is generated—but if a bank is easier to get to, customers may also shop in the neighborhood, and demand for subways will increase. Looking at Toranomon Station, I thought that this might be a new way of building communities through a collaboration between banks and public transportation. This discussion of elevators might be an extreme example, but I hope Mizuho will take the mid– to long–term view in pursuing its "heartful" approach.
Thank you all for this very valuable discussion. We hope to take what we have heard today and put it to good use in a number of ways. Thank you for joining us today.