Message from the President
Instilling and implementing our Purpose through dialogue with all employees
A year has passed since I assumed the position of president. Looking back, I have come to many realizations. And, while I have uncovered new challenges that we face, I have also been able to reaffirm our company's strengths. In the two decades since our founding, we have responded to the wishes of our customers, constantly pushing ourselves to think outside the box, and continuously developing new services. The pace of change, however, has become increasingly frenetic. Further innovation is required if we are to continue to offer services beyond our customers' expectations. To achieve this, I believe it is very important for all employees to have a strong desire to transcend the framework of financial services to face the various social issues around us and contribute to resolving them. This is also linked to the fulfillment of our company's Purpose.
With the aim of sharing these thoughts with our employees, we have held nearly 60 town hall meetings over the past year—each limited to six or seven employees—and have talked with more than 500 people to this point. When we asked participants how they were reflecting our Purpose in their daily endeavors, many of them came up with ideas and case studies beyond what we had previously imagined. This indicated to us that everyone, regardless of department, is thinking earnestly about how they can contribute to fulfilling the Purpose through their work. For sharing these case studies with all employees to stimulate them, we conducted an internal event called "Purpose Award" at the end of FY2022. This was a contest in which employees from all departments were invited to submit initiatives that embodied our Purpose in action, and all participants voted in the final round of judging. Entries from all departments and subsidiaries totaled 47 initiatives. The top three initiatives were chosen in a vote by most of employees.. Judging the entries was truly hard, as they were all excellent. Through these efforts, we hope to move forward from understanding the Purpose to the implementation phase, and to firmly connect this to further growth by having all employees work toward the fulfillment of the Purpose.
Overview of FY2022
For FY2022, consolidated ordinary income was ¥154.9 billion—a new record—and ordinary profit totaled ¥28.9 billion. On a non-consolidated basis, Seven Bank recorded ¥120.5 billion in ordinary income and ¥31.5 billion in ordinary profit, resulting in increases in both consolidated and non-consolidated ordinary income and ordinary profit.
First, in our domestic ATM business, the number of ATMs installed was generally in line with the company’s plan, owing chiefly to installations outside the and the response to alternative needs of financial institutions in regional areas. The number of ATM transactions reached a total of 980 million for the year, and there was an average of 101.5 transactions per machine per day, broaching the 100 level for the first time in some time. This is largely due to the recovery of human traffic once the pandemic subsided. This has spread not only to cash deposits and withdrawals by traditional savings and loan institutions, but also into e-money and smartphone settlement businesses, cash charges to local currencies, and increased use of cards issued abroad by visitors to Japan.
In the financial services business, the number of accounts totaled 2,755,000, with a balance of ¥575.6 billion. Both areas exhibited growth, with a particularly robust gain of about 25% YoY in the balance of loans. Our view is that this is attributable to increasingly active individual consumer behavior and the corresponding proactive marketing undertakings on social media platforms.
In our overseas business, expansion continues particularly in Asia. In the U.S., we are implementing a host of initiatives, including demonstration experiments for credit services to meet small cash needs and further streamlining the management of funds in ATMs. The number of ATMs installed in Indonesia has grown to 5,557 as of the end of FY2022 (end of December 2022), and we will continue working to grow profits while ensuring profitability. In the Philippines, the number of ATMs reached 2,324 over the same period, and the number of transactions is growing steadily. Costs may be somewhat high in the country due to the inclusion of cash recycling machines (ATMs with banknote refunding), but we will capitalize on this to verify services for acceptance of cash proceeds from sales, with the goal of returning to profitability as quickly as possible.
New developments in the Medium-Term Management Plan
We have reached the midpoint of the third year of our Medium-Term Management Plan (FY2021–FY2025), and we believe that several of our projects are taking shape. We will accelerate the diversification of our domestic operations by evolving our core business—domestic ATMs—and further expanding our growth domains. The two major pillars of our business are a new value offering of ATMs, a service that provides a liaison for all kinds of authentications and procedures. Another is the upgrading of the retail business through the consolidation of Seven Card Service Co., Ltd. as a consolidated subsidiary, which was announced in April 2023.
First, with regard to offering new value through our ATMs, we see that various financial institutions are currently faced with the issue of being forced to raise operational efficiency to unprecedented levels, while also ensuring compliance with regulations. With this in mind, in September 2023, we will finally launch a couple of services leveraging the capabilities of our fourth-generation ATMs, which we have been testing since 2019.
We believe that utilizing our ATMs—already an established component of the social infrastructure—as a conduit for a variety of notifications and procedures through identity verification, will not only enhance the operational efficiency of financial institutions and businesses, but also heighten customer convenience and satisfaction. By making Seven Bank ATMs the conduit for all manner of authentication and procedures, we will work toward realizing a world where procedures can be performed nearby and in a convenient manner.
Secondly, we are also looking to upgrade our retail business, which is driven by a host of changes in the financial services environment. These include advances in technology, the emergence of fintech companies, the diversification of financial services, and changes in global financial policy. Given these conditions, we decided to make Seven Card Service a subsidiary with the aim of creating new experience value in retail finance, transcending traditional boundaries. Based on our 7iD customer base—which is 28 million members strong—we aim to integrate the retail and financial realms to develop new services closely linked to customers' lives, such as settlement and credit services for purchasing activities and asset management from a retail perspective, through both real and digital marketing activities, while combining bank and non-bank assets.
Regarding FY2025 financial goals, we aim for an ordinary income of ¥250 billion instead of the ¥170 billion originally planned, and we have adjusted our ordinary profit target from ¥35 billion to ¥45 billion. With the goal of striking a balance over the medium to long term between growth investment and capital efficiency, we will continue to aim for an ROE of 8% or higher and a payout ratio of 40% or higher. We will implement various functional enhancements to ensure our mainstay domestic ATM platform business remains a stable income base. And, while constructing an optimally balanced business portfolio that includes domestic retail—which is expanding its financial service domain—as well as our overseas business, where we anticipate further growth, and corporate services, for which we are seeing an increasing need from society, we will work earnestly to achieve our financial goals for 2025.
Reinforce management foundation to support sustainable growth
In implementing such a growth strategy, we believe that cultivating an organization that promotes the growth of both individuals and the company is the single most important factor. We are focusing on elevating employee awareness, developing human resources, and encouraging engagement to instill an innovative mindset in all employees, using our company as a challenging field.
Take our internal EX10 program, for example, which is designed to encourage voluntary innovation activities. Under this program, employees use 10% of their work time to anticipate future contributions to the company or improve their skills, even in areas not directly related to their current endeavors. Moreover, “7Bank Academia” helps employees to themselves develop an innovative mindset, and the activity is designed to connect with external communities and obtain methods for new business creation. Through these and other initiatives, we will sustain our human, organizational, and corporate transformation.
Meanwhile, with the establishment of the Data Management Office, the creation of a culture and foundation for the everyday utilization of data is taking root. It has grown into a community of more than 200 participants. Moreover, we are participating in the Financial Data Utilizing Association (FDUA) to deepen external collaboration on AI and data utilization, to acquire skill sets, to heighten individual awareness, and to reform the business model itself. In terms of business, through the accelerator program for creating new businesses, we will promote open innovation by deepening cooperation with startups and other industries.
These efforts cannot be immediately reflected in the top line of the balance sheet, but these activities themselves create our culture to pursue our Purpose, "Create a better version of daily life by going beyond the wishes of our customers," so we will spare no effort in promoting these activities.
I often talk about “empathy” with our employees. There are two types of empathy；cognitive and emotional, with the former defined as viewing things from the standpoint of others and the latter referring to the perception of the feelings of others as one's own. Utilizing them in a balanced way should lead to the creation of products and services that go beyond the wishes of our customers and lead to the birth of a new tomorrow.
Promoting sustainability for the environment and society
I have been a member of Seven Bank since it was founded, and have been deeply involved in its growth to date driven by its ATM-based business model. Up to now, I have realized we fortunate to receive incredible support from a wide variety of stakeholders, ranging from group companies, partner financial institutions and operating companies to firms involved in ATM development and operation, and open innovation partners.
In FY2019, we identified and selected five material issues and are pushing forward with company-wide efforts to achieve a sustainable society. We believe that collaboration with our diverse group of stakeholders is essential to solving social issues through our core business.
For example, in Materiality 1—"Offer a safe and secure settlement infrastructure"—we work with partner companies that support ceaseless ATM operations; in Materiality 2—"Create a lifestyle through new financial services"—we work with five organizations that have registered as recipients of donations via ATMs; and in Materiality 4—"Reduce the environmental burden"—we work with various companies to resolve larger-scale social issues, including a manufacturer that developed a new ATM model that lowers power usage by 40% and a business that recycles 100% of ATMs.
Together with our diverse group of stakeholders, we will continue to implement business activities with a focus on environmental and social sustainability, thereby contributing to the achievement of the United Nations’ Sustainable Development Goals (SDGs).
I regard our company as something of a tech startup. This is because of our desire to discard previous successes, question the conventional wisdom, and make changes. We hope to utilize ATMs, an unparalleled element of the social infrastructure, to promote digital transformation (DX) across the breadth of society and deliver convenient, safe, and unique financial services to the 22 million customers who visit each of our group's branches on a daily basis.
In addition to the aforementioned aspirations, by executing specific strategies in line with the updated Medium-Term Management Plan, we will continue to work toward fulfilling our Purpose, aiming to put our second stage of growth on track and make the utmost effort for further sustained growth and higher corporate value.
the President and Representative Director