Case Details

Japan Net Bank (JNB), Japan's first Internet bank without physical branches, began operation in October 2000. It attracted mainly young customers looking for convenient, round-the-clock bank services with much more competitive interest rates and transaction charges than traditional Japanese banks. Its access channels included the mobile Internet service i-mode and fixed-line Internet. JNB relied on flexible, open computer systems and a small, young workforce to minimise operation cost. Its shareholders, including parent company Sumitomo Mitsui Banking Corporation (SMBC) as well as NTT DoCoMo (provider of i-mode), were all big companies from different industry sectors. By April 2001 JNB had 130,000 customers. But it needed to resolve a number of issues before being able to achieve long-term success in the face of strong competition from bricks-and-mortar banks and new Internet-only banks. One of those issues was about how to meet with wide fluctuations in usage without over-investing; the other was alliance management, i.e., how to co-operate with alliance partners to achieve competitive advantage. This case is designed to help students assess the competitiveness of an Internet-only model of retail banking in Japan, study the business potential of alliances, and develop strategies for efficient co-operation. It could also help students understand that e-commerce ventures are particularly prone to bursts in demand, and therefore need to develop solutions that could balance investment on IT and the scalability of IT systems.