TOKYO - Japan's major banks are intensifying competition for household money as rising interest rates revive the appeal of deposits, prompting lenders to launch new savings products, wealth-management services and point-based incentives.
Higher interest rates are creating a mixed picture for consumers. Borrowers with mortgages are increasingly concerned about rising repayment costs, while savers stand to benefit as major banks raise deposit rates.
Competition has become particularly fierce as banks seek to persuade customers to move or keep more of their money with them.
One megabank president said on September 7 that the bank would permanently offer point rewards of up to 2%, promoting the service as convenient and economical.
The shift reflects a broader return to what the industry describes as a "world with interest rates," after years in which ultra-low rates gave customers little reason to compare deposit products closely.
Mizuho Bank is among the lenders trying to attract savers with renewed emphasis on savings deposits. It is currently running a limited-time campaign that doubles interest rates on a product in which the rate rises in stages once the deposited amount exceeds 100,000 yen.
Mitsubishi UFJ Financial Group, meanwhile, announced a new service in August aimed at wealthy customers. People with financial assets of at least 30 million yen can receive benefits including preferential deposit interest rates.
Sumitomo Mitsui Financial Group is expanding its Olive financial service, which allows customers to manage money through an app and includes links with V Point, as it seeks to strengthen customer loyalty.
Banks have a strong incentive to attract deposits because the difference between what they pay depositors and what they earn by lending money is a major source of profit.
For example, if a bank gathers deposits at an interest cost of 1% and lends the same money at 3%, the 2 percentage-point spread becomes income for the bank. On 1 million yen, that difference would amount to 20,000 yen before other costs.
Consumers, however, must also decide whether to keep their money in deposits or shift more of it into investments.
People interviewed about their choices showed widely differing approaches.
One person said a lack of knowledge about investing had prevented her from getting started, leaving her money entirely in savings.
Another said about 80% of her assets were in savings and 20% in investments because she preferred to keep most of her money in safe assets that could be accessed quickly.
Others said they were using NISA and iDeCo as part of preparations for retirement while also dividing savings between ordinary and fixed-term deposits.
One pensioner said around 60% of his assets were invested and 40% were held in deposits, adding that he might have invested more aggressively if he were younger.
Another man, who began investing about 15 years ago, said his current financial assets were around 20 million yen and that he now wanted to gradually draw down some of his holdings and spend the money on things he enjoys as he gets older.
Deposits generally offer lower potential returns than investments, but they remain attractive as relatively defensive assets that are less exposed to market losses.
The battle for deposits is also spreading beyond Japan's megabanks to regional financial institutions, some of which are introducing unusual products tied to local causes.
One example is the Kairos Support Time Deposit, a product designed to support regional space-industry development.
The deposit offers an annual interest rate of 0.6%, while an amount equivalent to 0.01% of total deposits is donated to an organization promoting the local space sector.
The product has proved significantly more popular than expected, attracting 7.2 billion yen in deposits, more than double the original target.
That means about 723,000 yen is being directed to support space-related activities through the donation mechanism.
Such products illustrate how banks are increasingly trying to differentiate themselves not only through rates but also through themes, rewards and services that appeal to customers' personal interests.
As rates continue to rise, consumers may also see even more attractive deposit products emerge.
Financial experts say customers should pay close attention to changes in interest rates and compare products rather than automatically keeping their money with the bank they have always used.
There is no single correct choice between deposits and investments, with the most appropriate balance depending on each person's age, financial goals and tolerance for risk.
Source: FNN
