Financial institutions across Japan are testing a new fintech-powered system to spur business growth as they work to improve the banking sector and revitalize the economy.

Kiyotsugu Yoshihara, Ph.D. CEO of Data Lupe and a researcher at Kyoto University, she is leading a groundbreaking trial to use a new index to create innovative business services that could help transform the Japanese banking industry.

As an esteemed professional with a distinguished career in academia and finance, Yoshihara is working on a cutting-edge solution called iBank Index. His goal is to improve integrity while increasing profits for financial institutions across the country.

This article takes a closer look at the potential of the iBank index to revive corporate growth in the Japanese economy through its data-driven fintech capabilities.

What is the iBank Index?

The iBank Index is a transformative concept designed to evaluate financial institutions based on their contributions to customer development rather than traditional metrics. This ranking system rates financial institutions based on their contribution to a company’s successes and failures, demonstrating how beneficial each bank is to its business customers.

The new index recognizes banks that improve the performance of their clients. Not on the bank side.

By combining Tokyo Shoko Research’s corporate financial data with this theory, Yoshihara was able to identify and analyze good trends and bad results in various types of banks and credit unions across the country. In addition, he proposed using this indicator not only for public interests in finance but also for private companies, allowing institutions to achieve an ideal balance between profit opportunities and social contributions.

An Innovative Approach to Stimulate Japan’s Business Sector and National Economy

In 1986, Japan experienced its peak year of business activity with more than 5.35 million companies established; however, since then, the number has steadily declined to a worrying level. This decline indicates that the Japanese economy is at risk of slowing down and needs additional stimulus.

As a former highly esteemed executive of Japan’s largest Shinkin Bank, Yoshihara has set out to use his new iBank index as a catalyst to revitalize and stimulate Japan’s banking industry, thereby facilitating business and economic growth. He has been tasked with leading the test across Japan’s financial sector to show that banks can be one of Japan’s most compelling development engines.

What organizations are supporting the iBank index?

The impact of Yoshihara’s groundbreaking research has been so profound that it captivated multilateral organizations such as the Asian Development Bank (ADB), which later published his work. The iBank Index is also supported by the Japan Financial Services Agency and is patented under Yoshihara’s registration number, 6754107.

Although Japan’s Ministry of Finance is not directly involved, it remains dedicated to safeguarding the stability of banks through six indicators, which need to be mentioned. One such measure is profitability, which is essential to ensure the long-term success and security of banks and their customers. But as necessary as it is, its reach only extends towards banking operations without any influence on other businesses outside those walls.

How does the iBank Index usher in a new era of self-regulation?

In essence, the iBank index could greatly enhance Japan’s Ministry of Finance by introducing a fintech-powered ranking system to bring greater transparency to banking institutions. This innovation could help financial institutions and businesses make better-informed decisions.

The iBank Index could also allow banks to measure their performance against their peers, reexamine their strategies, identify potential risks and rewards, and ultimately improve customer experience within the industry. It enables self-regulation by giving banks the power to assess their performance and that of their competitors.

It’s a system that could be replicated around the world, enabling banks to better understand their market position, make smarter decisions, and increase customer satisfaction. It would also help banks protect their clients from systemic risks by allowing them to assess the impact of their decisions on a broader scale.

Why does the iBank Index take advantage of ESG criteria?

Banks are an essential part of any business owner’s financial journey. Still, it can be challenging to identify which ones are putting in the time and resources to help these small and medium-sized enterprises (SMEs) succeed.

Yoshihara is stoking an inspiring and competitive atmosphere among banks while providing valuable data on proven paths to success that others can replicate. Its goal is to create a more open financial system by challenging each bank’s commitment to environmental, social and governance (ESG) principles to empower clients to achieve more notable achievements.

Regional finance is facing disruption from advancing technology, leading to rapidly converging markets around the world and blurring distinctions between them. It raises questions about its continued relevance if banks fail to keep up with this pace of change.

Focusing on the customer is essential for the survival of financial companies; the iBank Index incentivizes banks towards this goal. Banks must go beyond traditional management metrics to remain competitive and embrace change. Additionally, integrating ESG initiatives into an institution’s rating system can be used to respond to changing client needs.

The bottom line

The iBank Index is a tool that could transform banking by leveraging an ESG-based approach through the power of visibility. It allows financial institutions to see their performance levels, inspiring a more competitive environment as each establishment strives to be the best in the financial industry.

By leveraging the latest advances in financial technology to create a real-time index based on accurate data, legacy financial institutions can integrate that information into their services and remain competitive in an ever-changing marketplace. It allows them to remain relevant and even at the forefront of their industry.

Through this effort, Yoshihara anticipates that banks can promote sustainable economic development and build a more financially inclusive system in Japan. He is hopeful that the iBank index will provide valuable information for both banks and their beneficiaries, paving the way for a better future for the financial industry.