Japanese banks ease away from using personal seals

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It has taken more than a century, but Japanese banks are finally parting ways with a piece of technology that has not felt cutting edge since the shogun reigned.

Hanko, the personal stamps required for even simple transactions in Japan since the 1800s, are getting phased out at some of the country’s biggest financial institutions.

Lenders have begun allowing customers to transfer money or make payments with their smartphone or a tablet, instead of pressing wood to ink and paper like their ancestors. For millennials in Japan, one of the most tech-obsessed places on Earth, the change is long overdue.

“It’s too much work to bring hanko and do the paperwork just to withdraw money at branches,” said Tomoyuki Shiraishi, a 24-year-old construction worker.

After arriving late to the fintech revolution, Japanese banks are racing to catch up as they try to slash paperwork, boost efficiency and appeal to the younger generation.

Mitsubishi UFJ Financial Group Inc (MUFG), the country’s biggest lender, has started offering accounts that do not require hanko or passbooks, and is overhauling its branch network to replace rows of tellers with tablet computers.

The goal is to help customers adapt to digital platforms so that they can eventually do more banking on their own devices.

As many as 100 of MUFG’s 500-plus domestic outlets would convert to the new format by 2024. The Tokyo-based lender plans to halve the number of branches with traditional counters.

MUFG is not alone. Resona Holdings Inc last year started allowing customers to open accounts without hanko at about 600 branches.

The shift to digital has support from Japanese Prime Minister Shinzo Abe’s administration, which has drafted a bill to make more government services available online.

Winning over Japan’s bureaucracy has not been easy.

MUFG needed two years to convince 450 local governments to begin processing tax payments electronically, said Takayuki Ogura, director of its main banking unit.

In other areas of Japanese officialdom, hanko are firmly entrenched. Small businesses use them for many contracts, and they are still required for things such as marriage and home ownership.

The making of hanko is a US$1.5 billion-a-year industry, said fourth-generation carver Keiichi Fukushima, vice chairman of the national trade group.

“There are still lots of occasions where we need to use hanko in our lives,” Fukushima said.



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