Digital Strategy February 19, 2019 Mitsubishi UFJ Financial Group Inc.
This document contains forward-looking statements in regard to forecasts, targets and plans of Mitsubishi UFJ Financial Group, Inc. (“MUFG”) and its group companies (collectively, “the group”). These forward-looking statements are based on information currently available to the group and are stated here on the basis of the outlook at the time that this document was produced. In addition, in producing these statements certain assumptions (premises) have been utilized. These statements and assumptions (premises) are subjective and may prove to be incorrect and may not be realized in the future. Underlying such circumstances are a large number of risks and uncertainties. Please see other disclosure and public filings made or will be made by MUFG and the other companies comprising the group, including the latest kessantanshin, financial reports, Japanese securities reports, Integrated reports and annual reports, for additional information regarding such risks and uncertainties. The group has no obligation or intent to update any forward-looking statements contained in this document. In addition, information on companies and other entities outside the group that is recorded in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by the group and cannot be guaranteed. The financial information used in this document was prepared in accordance with Japanese GAAP (which includes Japanese managerial accounting standards), unless otherwise stated. Japanese GAAP and U.S. GAAP, differ in certain important respects. You should consult your own professional advisers for a more complete understanding of the differences between U.S. GAAP and Japanese GAAP and the generally accepted accounting principles of other jurisdictions and how those differences might affect the financial information contained in this document. This document is being released by MUFG outside of the United States and is not targeted at persons located in the United States. 2
Contents Part 1 Digital strategy 4 1. Key initiatives of MUFG Re-Imagining Strategy 5 2. Initiatives for digital transformation 6 Part 2 Major initiatives 10 1. Settlement, cashless 11 2. Transforming customers’ channels / BPR 19 3. Open innovation 26 Part 3 IT strategy supporting digital transformation 31 1. IT investment strategy 32 2. IT architecture 33 3. Utilizing the cloud 35 4. Work style reforms 37 3
Part 1: Digital strategy 4
1. Key initiatives of MUFG Re-Imagining Strategy Eleven transformation initiatives • “Eleven Transformation Initiatives” have been outlined in the new medium-term business plan (MTBP) as specific initiatives to achieve the MUFG Re-Imagining Strategy • “Digital Technology” is essential to support all other initiatives Sales Channel 2 1 Eleven Transformation Initiatives Digital Technology Wealth Management 3 Customer segment New Model for Wholesale Banking in Japan 4 Real Estate 5 Asset Management in Japan 6 Institutional Investors 7 Global CIB 8 Overseas Operations 9 Head office Human Resources 10 Corporate Center Operations 11 5
2. Initiatives for digital transformation MUFG’s approach • Promote digital transformation from 3 different perspectives: “Improve”, “Reform” and “Disrupt” Improve Reform Disrupt Improvements based on existing Reforms via changes in Disruptive innovation employing business models and processes business models and processes unconventional thinking Impact Disrupt External input Public competition AI for ideas Future bank branches Reform Data utilization Improve External input Online application procedures STP *1 for back office operations Online bank counter Paperless Time Innovation Digitalization 6 *1 Straight-Through Processing
2. Initiatives for digital transformation Increase in net operating income through various initiatives Aspiration for FY23 (final year of next MTBP) (¥bn) Achieve further by structural reform 200 Revenue growth 80 Achieve further by structural reform 100 Cost reduction 120 0 As of May 2017 As of Feb 2019 (Announced MUFG Re-Imagining Strategy) (Estimate) 7
2. Initiatives for digital transformation Initiatives in each area Individuals Corporates High-end The masses Small Medium Large Focus area International Payment / SME settlement Areas working with alliance P2P settlement POS remittance partners, etc. Products On-line data lending P2P lending Cloud funding On-line data lending Trade finance Micro Social Robo-advisor investment lending Business related to ICO Revenue cryptocurrency ( Initial Coin Offering) growth Business financial Personal Channels management Financial Cloud accounting (BFM) Management (PFM) API RegTech Middle / back Platform (Regulation + Financial information Technology) streaming Efficiency Streamlining Real Estate Tech financial operation RPA (Robotic Process Technologies Biometric Automation) Cyber security Applied identification Blockchain Basic IoT Quantum AI (ML *1 , DL *2 ) AI (NLP *3 ) ( Internet of Things) computing 8 *1 Machine learning *2 Deep learning *3 Natural language processing
2. Initiatives for digital transformation Initiatives in each area Individuals Corporates High-end The masses Small Medium Large Focus area International Payment / SME settlement Part2-1 Areas working with alliance P2P settlement POS remittance partners, etc. Settlement, Products On-line data lending P2P lending Cloud funding On-line data lending Trade finance cashless Micro Social Robo-advisor investment lending Data business Business related to ICO Revenue cryptocurrency ( Initial Coin Offering) growth Business fund Part2-2 Channels management Personal Cloud accounting Transforming (BFM) Financial Management customers’ channels API RegTech Part2-2 Middle / back Platform (Regulation + Financial information Technology) streaming BPR *1 Efficiency Streamlining Real Estate Tech financial operation RPA (Robotic Process Technologies Biometric Automation) Part2-3 Cyber security Applied identification Blockchain Open New technologies Basic IoT Quantum innovation AI (ML *1 , DL *2 ) AI (NLP *3 ) ( Internet of Things) computing 9 *1 Business Process Reengineering
Part 2: Major initiatives 10
1. Settlement, cashless Circumstances where people use payment services • People can select the optimal payment methods suited to their individual circumstance • E-money will become a mainstay settlement method, in addition to bank transfers, direct debit payment and credit card payment Purchase of consumer goods and services (spot payment) Brick-and-mortar channel E-commerce channel Cash only stores Stores with cashless payment Shopping websites Subscription Transportation (shopping streets, terminals (convenience stores, expense small stores) supermarkets) 1 SUBSCRIBE 24H e-money Credit card Increased use of new Cash payment services Individual Money Bank transfer transfer (incl. payroll) Direct debit / credit card Direct debit Financial Rent Utility bills Mobile phone bills Deposit P2P settlement Tax instruments (mortgage repayment) such as stocks $ and insurance TAX $ ¥ % Periodic payment Others 11
1. Settlement, cashless Legal perspective of payment instruments • In response to growing calls from around the globe for the prevention of money laundering, banks have spent considerable expenses to put in place monitoring and other countermeasures and establish a safe and secure settlement infrastructure Legal perspective of payment instruments Money transfer Prepaid payment Banks Credit cards Points Cryptocurrencies service providers instruments Services P C 1234 5678 1234 5678 Issuance Spot trading Market size Inter-bank transfer *1 Volume *2 Issuance volume *3 Transaction volume *4 volume *5 volume *6 (FY17) JPY 2,860tn / year JPY 1.1tn / year JPY 23.7tn / year JPY 58.3tn / year JPY 1.8tn / year JPY 12.7tn / year Installment Payment Ruling law Banking Act Payment Services Act N/A Sales Act Services Act Exchange to: Exchang Up to JPY 1mm / Reload: Yes, No Yes, Exchange Unlimited Unlimited transaction Exchange to: No (withdrawal only) -eability from: No (1) At account (1) Account opening, Sending/receiving At signing up for opening, (2) Transfer (2) Cash transaction over JPY100thd, KYC *7 No credit card No over JPY 100thd, over JPY100thd, closing recurring application (3) Exchange over (3) Withdrawal of cash remittance contract JPY 2 mm over JPY 2mm Consumer Frauds are Manage separately asset Deposit insurance 100% deposit 50% deposit covered by N/A from provider’s account protection insurance Retaining Possible No retention Possible funds 12 *Notes 1-6 are explained on page 38 *7 KYC based on Act on Protection of Transfer of Criminal Proceeds
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