Tokyo eases the line between banks and brokerages
Tokyo — The ''hundred years' war'' over territory between Japanese banks and securities companies is heating up. The Tokyo government is gradually lifting restrictions on the financial services industry, eliminating many of the former clear lines of demarcation among various sectors.
Thus, banks are invading the ''turf'' of the securities companies, which in turn are developing rival bank-style services, while newly emerging consumer finance companies are also snapping at the banks' heels.
Everyone talks of the need to develop into a ''total financial services company,'' taking advantage of the technological advances in telecommunications and information-processing.
The banks, long champing at the bit over a legal ban on securities dealing, have been building up expertise in this field through their activities in the world's main financial centers like New York and London.
With revisions in the 54-year-old banking law, however, they are now able to deal with the public in government bonds.
The securities companies were upset over this, especially as they are still legally prevented from conducting bank-style monetary settlements and domestic and foreign exchange transactions.
This may not last. Looking at the inevitable trend toward liberalization, Hiroshi Kitazawa, a director of the Mitsubishi Research Institute, predicts ''eventual total removal of the boundary line between the banking and securities worlds.''
The first counterblow has been struck by Nomura, one of the big four securities companies, with a computerized, individual investor ''card service,'' an idea soon to be copied by its three main rivals.
(Unlike their usually more specialized American equivalents, Japanese securities houses offer comprehensive services as securities dealers, brokers, underwriters, consultants, and information collectors and analysts, as well as the services of members of the stock exchange.)
Owners of such cards will be able to cash national bonds they possess at any time, although the service is currently limited to medium-term issues maturing in two to five years.
Yamaichi, another of the big four, sees this as merely a first step toward a major redevelopment of the securities industry, countering the advantage now possessed by banks through their well-developed automatic cash dispensers and automatic teller machines (ATM).
The securities companies are making preparations for their own ATM facilities , based on on-line computer services. Yamaichi plans to open its first unmanned ATM office shortly in Tokyo.
With the gradual relaxation of government controls, the securities companies want to be ready to transform themselves into ''a new kind of bank,'' offering a wide range of attractive new investment vehicles, for which customers would be able to use their cards to obtain cash for new investments or even to do shopping.
A Yamaichi spokesman said: ''A large part of the public shies away from stock dealing because of lack of knowledge and experience, but we think they will be attracted by the ease with which they could buy and sell bonds and investment trust shares.''
One industry expert predicts that in five years this sort of business will dominate the securities companies' activities, leaving stocks as a minor interest.
Both the banks and securities houses see computerized on-line services for their investor customers as the key to winning the newly developing territorial battle.
Nomura, for example, has tied up with American and European institutional investors and others to launch an international round-the-clock information service before the end of this year.
The banks are hitting back by also developing a wide range of new services. One expected to begin within this year is so-called ''firm banking,'' equivalent to the American ''cash management services.''
This involves a direct computer link between the bank and its main corporate clients to provide monetary, accounting, and other services. The No. 1 bank, Dai-Ichi Kangyo, led the way by signing contracts with 10 major business corporations for a service to begin this summer.
A spokesman said this would be the forerunner of the ''home bank service'' expected to be available to individual homes shortly. Dai-Ichi Kangyo plans an experimental service with 100 Tokyo households starting next fall.
What makes such ventures possible is a relaxation last October in Japan's hitherto stiff telecommunications laws to allow more freedom in data and private telephone communications within the business world. This is also linked to the development by Nippon Telegraph & Telephone Corporation of a nationwide optical fiber communications network.
Not everyone is happy with all these developments. Some financial experts have voiced concern that they could lead to what one called ''the wild melee in the United States between banks, securities houses, insurance, and retail business interests for customers for their wide range of financial services.''
Japan still features much stronger governmental and political controls than the United States.
But given the inevitable trend toward liberalization, some experts see a potential for confusion detrimental to the public interest, while others believe wide-open competition would be of immense benefit to everyone.