Friday, December 02, 2011

Banking in Japan #1: The Basics

For the next super-feature, AccessJ will be covering the details of banking in Japan: everything from opening an account to sending money overseas.

The Basics
The first thing you might notice is how most bank branches seemingly close at 3:00 PM (though the Post Office is usually open until 7pm). The second and perhaps most annoying thing you may notice next is that ATMs also close down, usually between 5:00-10:00 PM (we will cover ATMs in a later section). While there are some exceptions to the rule, you should be aware that 24-hour banking is generally not a Japan thing. Even internet banking and debit services turn off after a certain hour.

Luckily, being one of the world's largest economies, Japan does have a very large banking sector with a plethora of investment, retail, and local banks at your disposal. Opening an account (which we will cover next week) is generally pretty simple once you have established your residence in Japan, and Japanese banks are generally considered safe and fiscally sound.

Types of Banks
There are a variety of banking institutions in Japan ranging from agriculture cooperative banks to giant financial institutions. The official bank classifications are as follows:
  • ゆうちょ銀行 (yucho ginko) JP Bank--formerly the Japan Postal Savings Bank. Although the post service has been largely privitized, this bank retains a special status (see below)
  • 銀行 (ginko) regular bank-- this category includes everything from local banks to giant investment banks. Most are for profit institutions that offer a wide array of services.
  • 信用金庫 (shiyo kinko) a shinkin bank--sometimes referred to as a "local bank" or "credit union." In reality shinyo banks are in a separate legal class of banks that offer services to small and medium business as well as products geared towards local residents. These banks are usually member controlled and largely non-profit, focusing on very local areas.
  • 労金 (rokin) a labor union bank-- the full name of the umbrella institution is 中央労働金庫 (chuo rodokinko) or the Central Labor Union Bank which acts as a coordinator between local branches. These banks are mainly used by labor unions and cooperatives. 
  • 信用協同組合 (shinyo kyodo kumiai) a credit union-- these banks are fully non-profit and member owned and focus on very local areas. They are generally smaller than shikin banks.
  • 農業協同組合 (nogyo kyodo kumiai)-- an agriculture cooperative bank. JA Bank (part of the All-Japan Agriculture Federation) acts as an umbrella for local branches used by farmers and those in the food production business.
  • 漁業協同組合 (gyogyo kyodo kumiai)-- a fishermen cooperative bank. Affiliated with the All-Japan Fisheries Federation and represents local fishermen cooperatives.
JP Bank is special because it uses its own propriety banking network and account designations. Just about every Japanese person has a JP Bank account for saving and easy money transfers. However, the bank recently joined the 'national banking network' allowing for flexible inter-bank transfers. Despite offering more services after privatization, the bank is still primarily savings institution that eschews riskier financial products. There is also a maximum savings cap set down by law.

Banks are further broken down by branches which can be identified as follows
  • 本店 (honten) Main branch
  • 支店 (shiten) Regular branch
  • 出張所 (shucchojo) A sub-branch, mini-branch
Make sure you know what type of bank you have and what branch, since when you sign up for automated money transfers or wire money (which we will cover later), you are always asked. You can find this info in your bankbook.

Other Posts in This Series
# 1 The Basics
# 2 Opening an Account
# 3 Savings and Fixed Deposits
# 4 Internet Banking and Net Banks 
# 5 J-Debit and Pay Easy
# 6 ATMs
# 7 Domestic Money Transfers
# 8 International Money Transfers

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