Mizuho Financial seeks Google's Expertise to Digitize its Banking
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Mizuho Financial Group continued to encounter repeated system failure in its retail banking systems
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Hence, the partnership with Google becomes critical for Mizuho in improving its operational capabilities
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Japan reported the increasing adoption of internet banking following digitalization
Mizuho Financial seeks Google's Expertise to Digitize its Banking
On March 23, 2022, Mizuho Financial Group entered into a strategic partnership with Google to accelerate the digitization of its entire retail banking system. Mizuho intends to expedite its digitization efforts that commenced at the beginning of last year. The Mizuho Financial Group faced system failures at its high-profile banking unit, and such system failures continued over the past couple of months. With this partnership, Mizuho expects to transform and modernize its banking system, adopt internet banking, and unify its system digitally.
System Failures at Mizuho
Mizuho reported many system-related failures in the past year, including 11 instances of ATM failures, data center failures, and failure of communications control equipment. One such failure led to 2,700 failed transaction requests in a day, disrupted its over-the-counter services, caused server outages wherein customers couldn't log into their accounts for hours, and the backup systems also failed. These system failures occurred despite the $4 billion overhaul of its system in 2019. The Japanese regulator, Financial Services Agency (FSA), reprimanded Mizuho for these glitches, ordering the bank to improve its banking services.
Mizuho Intends to Solve System Failures
The partnership aims to capture the internet search data from Google and use the cloud services offered by Google as tools to analyze customers, their transactions, and banking trends at their retail banking branches. Under this strategic agreement, both companies will work to improve the banking system, modernize the computer systems, and make the bank's employees adept at the digital leap. The bank already has data such as customers' transaction records, age, and income. On the other hand, Google has region-specific internet search data and cloud services. By combining these abilities, performing data analysis, and developing these services, Mizuho will be able to improve the customers' banking services. With this partnership, Mizuho seeks to hyper-personalize its services for retail customers through data-driven platforms and deliver advanced digital financial service offerings such as Banking-as-a-Service (BaaS).
Google to Gain an Edge in Japanese Fintech
With the growth in global fintech, Google intends to foray into the fintech ecosystem. The partnership with Mizuho presents an opportunity for Google to understand the banking ecosystem of Japan and gain insights into the spending patterns and understand Mizuho's customer base. Google made substantial acquisitions that will provide it a long-term competitive advantage and give it a firm footing in the fintech industry.
Google seeks to enhance its presence in the Japanese cashless transactions market and aims at expanding the market. In mid-2021, Google acquired a Tokyo-based cashless payment provider, Pring, owned by Mizuho Financial Group and other investors. With this acquisition, Google will reduce its dependence on third parties for making transactions and providing payment-related services in Japan. Google will also strive to promote and provide its financial services using the existing network of Pring.
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