Progress of the Medium-term Business Plan

Transcription

1 Our Strategies for Creating Value Progress of the Medium-term Business Plan In fiscal 2016, Mizuho began to implement its three-year mediumterm business plan, entitled Progressive Development of One MIZUHO The Path to a Financial Services Consulting Group. Under the new medium-term business plan, Mizuho will perfect the One MIZUHO Strategy by creating a new business model as a financial services consulting group. The two foundations for this effort will be the full implementation of the Customer First principle promoted in the previous medium-term business plan and the pursuit of operational excellence. Mizuho has also defined 5 basic polices based on medium-term risk appetite policy and business portfolio analysis and 10 basic as specific representations of those 5 policies with regards to business strategy, financial strategy, and management foundations. In the plan s first year (fiscal 2016), the group united in taking action based on the management policy of strengthening our foundation for establishing a sustainable competitive advantage. Mizuho s Risk Appetite Framework (RAF)P75-76 Mizuho has positioned the RAF as the management control framework to support optimization of orderly risk-taking and riskreturn. Specifically, we will further concretely define our risk appetite* in establishing our medium-term and fiscal year business plans. The risk appetite will be the basis for establishing our business strategy, resource allocation, and budget, thus integrating risk management, business strategy, and profits in order to maximize our risk-return. * Risk appetite consists of a risk appetite policy that serves as the fundamental policy regarding our risk-taking activities and risk appetite metrics that serve as means of quantifying the level of risk-taking based on the risk appetite policy. Essence of New Medium-term Business Plan Based on Our RAF Business Financial Risk appetite Medium-term risk appetite policy (FY ) Management foundations Highly value the customer first principle and asset quality to establish sustainable and stable profit base through selection and concentration of risk-taking areas Expand and strengthen noninterest business to improve the risk-return structure Seek to attain a sufficient CET1 ratio to guard against any stress resulting from external environment change Strengthen non-yen currency funding structure and balance sheet control Cross-shareholding disposal Establishing governance measures for each customer segment by improving the management of the RAF Develop and establish risk culture Business portfolio analysis Areas to focus on Areas to streamline Fully Implementing the Customer First Principle -Introduction of the In-house Company System- The needs of customers and society are becoming increasingly sophisticated with the rapid changes taking place in the global economic and social environment. In order to satisfy these needs, Mizuho must provide optimum solutions by fully implementing our Customer First principle, and by fully deploying the consulting capabilities of the group s asset management and research & consulting functions, in addition to the banking, trust banking, and securities functions. To thoroughly strengthen our Customer First principle approach and to realize our goal of becoming a financial services consulting group, we have introduced a new in-house company system. Specifically, Mizuho has established five in-house companies that formulate and implement group-wide across banking, trust banking, securities entities, etc. for each customer segment. Product and research functions have been reorganized into two independent units to enhance expertise and promote utilization across all the inhouse companies. In fiscal 2016, the first year for the in-house company system, we were able to move forward steadily with putting in place infrastructure and various types of frameworks. As a result, we have achieved our initial objectives with positive benefits such as strategy execution based on customer attributes, speeding up of decision making by delegating authority to company heads, and strengthening of measures to increase each in-house company s profitability. Starting in fiscal 2017, we are addressing higher-level themes such as optimizing personnel allocation/collaboration between in-house companies and further reforming our cost/personnel structure. As our in-house company system operations increase in sophistication, we will be even better able to satisfy customer needs. 23 Mizuho Financial Group

2 Our Strategies for Creating Value Progress of the Medium-term Business Plan Essence of the medium-term business plan Mizuho s objectives Financial services consulting group The most trusted partner in solving problems and supporting the sustainable growth of customers and communities Fully implement the Customer First principle (Customer-Focused) Pursue operational excellence 5 basic policies Introduction of the in-house company system Selecting and focusing of business areas Establishment of a resilient financial base Proactive involvement in financial innovation Embedding a corporate culture that encourages the active participation of our workforce to support a stronger Mizuho 10 Basic Business Financial 1 Strengthening our model for non-interest income business on a global basis 2 Responding to the shift from savings to investment P Strengthening our research and consulting functions P Responding to Fintech P Promoting the Area One MIZUHO strategy P Controlling the balance sheet strategically and reforming the cost structure P Disposing of cross-shareholdings P17-20 Management foundations 8 Completing implementation of the next-generation IT system P Fundamental reforms of HR management P Continued initiatives towards embedding a corporate culture to support a strong organization P85-88 Measures to Increase Sophistication of In-house Company System Operations FY 2016 Introduction of in-house company system FY2017- Increased sophistication for in-house company system operations Measures for higher-level themes Previous medium-term business plan period Unit system Building of a foundation for unified group operations Objectives Consistency of strategy Speed up decision-making processes and enhance group s frontline capabilities Clear responsibility for profits Benefits Strategy execution based on customer attributes Speeded up decision making by authority delegation to company heads Strengthened measures to increase profitability of each in-house company Completed the system design for achieving initial objectives Future issues Optimization of personnel allocation/ collaboration between companies Further reform of cost/personnel structure 2017 Integrated Report 24

3 Our Strategies for Creating Value Progress of the Medium-term Business Plan Pursuing Operational Excellence In order to bring a sustainable competitive advantage to Mizuho, we are pursuing operational excellence by improving operations that provide the driving force for our together with our Customer First principle strategy. To accomplish this, we will thoroughly review our existing business processes, revise our channel strategy for branch and online/smartphone services, consolidate common operations, and incorporate technology innovation (Fintech, etc.) and new ideas. With such initiatives, we aim to improve operational efficiency and to enhance service value for customers by raising the sophistication of our operations. In fiscal 2016, Mizuho made steady progress on problemsolving-type measures aimed at streamlining Head Office functions and revising products and services. We also moved forward with structural-reform-type measures such as consolidation of group common operations and innovation of business processes using digital technology. Along with these, steady change was also seen in each individual employee s mind-set with respect to everyday work. Going forward, we will further accelerate employee mind-set reforms, while also moving to execute particularly structural-reformtype measures. Measures for Achieving Operational Excellence Improve customer service Strengthen cost competitiveness Channel strategy All branches provide banking, trust banking, and securities services Maximize operational excellence effects via structuralreform-type measures Expense reduction effect (compared to FY2015) No. of measures Standardization and systematization Speed up AI big data Create new business FY2016 FY2017 FY JPY (results) billion JPY billion JPY billion All problem-solving-type Problem-solving-type Problem-solving-type JPY15 billion JPY30 billion Structural-reform-type JPY20 billion Approx. 200 (results) Approx Structural-reform-type JPY40 billion Problemsolving-type + Structuralreform-type Revise channel strategy Consolidate common operations Utilize technology Pursue a sustainable competitive advantage through further structural reforms Mind-set reforms Foster an employee mind-set and embed a corporate culture Utilize know-how and best Stimulate measures led by Eliminate inward-facing energy practices within group frontline offices 25 Mizuho Financial Group

4 Our Strategies for Creating Value Progress of the Medium-term Business Plan Selecting and Focusing of Business Areas In order to optimally allocate limited management resources and achieve sustainable growth, in fiscal 2016 we clarified focus areas and areas to streamline by analyzing our business as a whole based on market attractiveness and Mizuho s competitive advantages. Going forward, we will move to steadily shift management resources from the areas to streamline to the focus areas. This should lead to increased profitability. Selecting and Focusing of Business Areas Business portfolio analysis Management resource rebalancing High Attractiveness of market Low Areas for streamlining and selection Competitive advantage Focus areas High Areas for streamlining and selection Cross-shareholdings Low-profitability lending Low-profitability transactions Strengthening of noninterest business via group collaboration M&A/DCM 2 /ECM 3 Face-to-face consulting Global 300 Focus areas Creation of new business using technology Fintech IT digitalization Up to FY2017 (plan) Up to fiscal 2017 (plan) Quantitative assessment Qualitative assessment RWA 1 Headcount Approx. -JPY2.3 trillion Approx. -1,000 RWA Headcount Approx. JPY3.9 trillion Approx. 1,340 Profitability Volatility Regulatory impact Capital efficiency In-house company collaboration Technology FY2016 RWA Results Headcount Approx. -JPY0.8 trillion Approx FY2016 Results RWA Approx. JPY1.7 trillion Headcount Approx Risk asset 2. Bond underwriting 3. Equity underwriting Embedding a Corporate Culture that Encourages the Active Participation of Our Workforce P85-88 In order to create a sustainable competitive advantage by strengthening the workforce that supports Mizuho, in fiscal 2016 we moved forward with a variety of measures for the establishment and spread of the fundamental reform of HR management to promote active participation of all employees. We also promoted measures for the establishment of a strong corporate culture that encourages all employees to take initiative. We will continue to implement and strengthen measures such as these. Embedding a Corporate Culture that Encourages the Active Participation of Our Workforce Fundamental reform of HR management to promote active participation of all employees 1 HR management that respects employees individuality Development-focused HR management aimed at enhancing employees strengths Multi-track HR management that responds to the career goals of a diverse workforce Promoting the health and wellbeing of employees and maintaining a healthy work environment 2 Strategic employee rotation 3 Development of future executive leaders 4 Globalization of Mizuho s talent and HR management 5 Promotion of diversity and inclusion HR management Corporate governance Integrated threepart initiative Culture Take the practice of the ideals and values of the One MIZUHO concept to the next level Efforts to establish a strong culture 1 Encouraging all employees to put the Mizuho Values* into practice Penetration of the Corporate Philosophy; making the Vision of Individual Offices a core component Continuing General Managers Off-site Meetings Utilizing training programs 2 Further promoting internal communication Creating a sense of unity and improving loyalty Vitalizing measures for mutual communication between employees Sharing examples of practicing Mizuho Values at a higher level * The values and principles shared by all of Mizuho s internal stakeholders to pursue the Vision: Customer First, Innovative Spirit, Team Spirit, Speed, and Passion 2017 Integrated Report 26

5 Our Strategies for Creating Value Progress of the Medium-term Business Plan Proactive involvement in financial innovation Through making use of cutting-edge technology and collaborating with external organizations, Mizuho is endeavoring to provide highly convenient services for its customers more so than before Approach to Financial Innovation Financial Environment In recent years, a worldwide trend toward offering innovative financial services has emerged, and it has been referred to as Fintech. Fintech includes such technologies as big data, artificial intelligence (AI), and blockchain, and it is looked to as the harbinger of new financial services. Along with this trend, in Japan also, the Banking Act has been revised to enable financial institutions to collaborate with venture businesses that are expected to develop new financial services to promote open innovation. In this connection, the so-called 5% rule, which, under the Banking Act, limited voting ownership in other companies by financial institutions to 5% has been relaxed for enabling investment into finance-related IT companies (Fintech companies). Directions for Mizuho s Initiatives Mizuho, as a megabank, has built up, on the one hand, a customer base and an information base, while also developing strengths in the form of financial knowledge and technology. On the other hand, Mizuho s business position has not always been strong in terms of innovative creation, advanced technology, and assessment of future business potential. In today s business environment, by collaborating with large vendors that have these strengths and Fintech companies, Mizuho is looking to create new businesses and provide highly convenient services for our customers more so than before, as to establish an advanced brand image as a financial institution. Promotion Structure To attain these goals, Mizuho established its Incubation Project Team, an independent and specialized team in July 2015 to strengthen new business creation and initiatives across the group. In addition, beginning in April 2017, to reinforce the creation of new businesses and realize greater efficiency and sophistication in existing businesses, we established the position of CDIO*, who is in charge with the mission of driving digital innovation. Accompanying the appointment of a CDIO, we also realigned our Incubation Project Team to form the Digital Innovation Department to enhance the structures for promoting digital innovation. * Chief Digital Innovation Officer 27 Mizuho Financial Group

6 Our Strategies for Creating Value Progress of the Medium-term Business Plan Fiscal 2016 Results In fiscal 2016 also, Mizuho continued to actively pursue collaborative businesses with other companies to provide new services through open innovation. Big Data and AI-based Fintech Lending Services In November 2016, Mizuho and Softbank set up a joint company, named J.Score, to provide big data and AI-based Fintech personal lending services, and this company has already begun activities to build its brand image. Beginning in September 2017, it is scheduled to provide the first score-based lending services via smartphones in Japan, and it will continue to gradually raise the level of its services. Establishment of Fintech Laboratory Facilities In October 2016, the first laboratory facilities 1 were established for structuring a Fintech Ecosystem 2 and to improve customer services. With the establishment of this facility, it will be possible to combine the technologies and knowledge of the Fintech companies with Mizuho s knowledge of financial services to facilitate open innovation and provide speedy technical verifications. 1. Innovation lab set up within the FinTech Center of Tokyo Finolab, which is jointly operated by Mitsubishi Estate, Dentsu, and Information Services International Dentsu. 2. An industrial ecosystem created through the multi faceted, continuous, interrelated connections between Fintech companies, financial institutions, businesses, investors, regulatory authorities, and specialists such as lawyers and accountants. Verification of Services Utilizing Blockchain Technology Mizuho is promoting the use of blockchain technology for financial services by working toward the start-up of the first verification project led by Japanese companies that will make use of this technology for global international remittances and international securities settlement services. New Payments Services In October 2016, Mizuho began collaboration with Metaps and WiL, with the aim of joint business development. The goals of this collaboration is to utilize the customer bases and knowledge on financial services of the MHFG and MHBK to create and offer new financial settlement services. Shop Bank Payment Payment via QR or bar code Transfers Transfers using electronic money Cash withdrawal Cash withdrawal using electronic money Digital wallet app Offering Services Using Robotics Mizuho has installed humanoid robots programmed with AI in its branches to provide functions that include analyzing customers insurance coverage and providing support for opening customer accounts. In addition, to provide completely new services that have not existed before, Mizuho is giving consideration to using the knowledge and know-how that it has accumulated from these initiatives in other channels other than robots, including mobile devices and ATMs. Electronic money Loading money Bank account Loading money from bank accounts (conversion to electronic money) Our Measures Going Forward Since establishing its Incubation Project Team, Mizuho has conducted surveys and research, principally in key component technologies such as big data, AI, and blockchain from the medium- to long-term perspective, and accumulated knowledge and know-how. Beginning in fiscal 2017, Mizuho has gone beyond just accumulating this technology and knowhow and is endeavoring to provide customers with even better services through creating new businesses as well as improving the efficiency and sophistication of existing businesses. Specifically, since 2016, Mizuho has been taking initiatives to release new services, such as new lending schemes and settlement methods as well as gone to commercialize blockchain technology for use in the trade finance field. Moreover, Mizuho s activities in this field have not been limited to finance, but also have included the establishment of new companies with WiL and other new venture investment companies based in Silicon Valley. After having established these new companies, Mizuho will be also engaged in creating next-generation business models and actual commercialization of related businesses through the broad use of IoT. Create Next-generation Business Model through Enhanced Business Promotion Structure Open innovation Collaborate flexibly with other industries, etc. Department newly established under the direct control of Group CEO New platform CEO Third-party shareholders Pursue actual business Create added value at an early stage CDIO New Director specializing in Fintech Investment (MHFG non-consolidated) Global expansion Co-creation and information gathering on a global basis Digital Innovation Department Reorganization Secondment / Dual appointment Head count: approx. 30 Establish an IOT incubator company Idea Commercialize Monetize 2017 Integrated Report 28