Japan's famous Lost Decade actually turned out to be a Lost Decade-and-a-Half, with little or no growth for more than 15 years in what was previously the world's second largest economy. But policy reforms designed to ignite Japan's economy are now helping lift the country out of stagnation. The yen's depreciation against the dollar, increased consumer spending and significant export gains are making the country a more attractive prospect for investors and an increasingly important focus for global banks. As organizations gear up for new investment in Japan, they will need help in making their treasury operations more nimble and efficient.
Banking in Japan has always presented significant challenges for treasury teams. Katakana, the Japanese character set for foreign words and official documents, is mandatory for payment instructions. Until now, this language requirement for beneficiary names has prevented the treasury function from integrating with global or regional shared service centers. Additionally, collecting payments, paying local taxes and managing local clearing fees have compelled organizations to operate a large number of bank accounts with little visibility to cash. Japanese clearing costs can be twenty to forty times more expensive than they are in other countries. As costs have continued to rise, treasurers have struggled to contain them.
Given the risk of missed investment opportunities in markets like Japan, international organizations need the help of the right banking partner in order to quickly rationalize their banking structures for clearing, payments and collections. A recent Hackett study showed that a third of global businesses surveyed saved an average of 40% in moving from a decentralized model to a Shared Services Organization (SSO). Another finding of the study is that when world class companies use SSOs, their finance costs are nearly half the level experienced by their peers.
J.P. Morgan's Multibank Gateway solution combines superior connectivity, language conversion tools and robust reporting to provide secure and accurate processing of multi-bank payment, reporting and sweeps. The Gateway platform is particularly suited to Japan treasury management, since it uses artificial intelligence to convert Roman characters to katakana and is specifically designed to help international treasurers manage multiple accounts -- eliminating language incompatibilities, centralizing cash, and automating reporting onto an organization's ERP. Via this platform, institutions are able to eliminate the issue of local language, free up liquidity, and rationalize costs.
In addition to its Multi-Bank solution, J.P. Morgan maintains a strong infrastructure for the clearing needs of financial institutions in Japan. The firm's strength as a global USD player helps clients clear USD in local Japan time and J.P. Morgan's Tokyo Dollar Clearing provides the platform for banks in Japan to clear USD in their time zone. For their Yen clearing needs, J.P. Morgan provides access to FXYCS, which brings efficiency to moving Yen globally.
Watch J.P. Morgan's Mukundan Iyengar share his insights on Japan -- why it matters to your business, and how J.P. Morgan can help.