If you go out for drinks with your colleagues in Japan, chances are that you end up doing warikan at the end of the night. And the warikan, or the splitting of the bill evenly, is most likely done in cash despite almost everyone having plastic and electronic money in their wallets. Thanks to this die-hard affection for cash, Japan loses over 2 trillion yen ($17.6 billion) every year.

The Japanese are one of the most cash-loving peoples in the advanced world. According to Boston Consulting Group, about 65% of payments in Japan are settled in cash, more than twice the average 32% among other rich economies.

The reason seems straightforward. The greater the demand for cash, the more ATMs banks install. The better the access to cash, the stronger the incentive to use cash.

In fact, ATMs are ubiquitous. According to the Japanese Bankers Association, there were 137,000 ATMs run by banks, shinkin banks (credit associations) and Japan Post Bank in the country at the end of September 2016. Add in the 55,000 machines run by retailers -- including Seven & i Holdings' Seven Bank and Aeon's Aeon Bank, and the total is over 200,000 ATMs in operation across the country.

Blame the bankbook

ATMs proliferated because banks prioritized improving customers' access to cash as well as allowing them to deposit excess cash more easily. They competed by increasing the number of ATMs and making them smarter to offer more services. The result was an abundance of ATMs and their bloated costs, which now weigh heavily on banks' balance sheets.

Banks, however, find it difficult to reduce their ATMs. Even introducing joint ATMs among several banks is not an option. The problem is the bankbook, said an executive at a major bank that once considered and gave up the idea of integrating ATMs with another bank.