The Sony Paystation

Sony's plan to launch a full-service online bank this summer should come as no surprise; a virtual bank represents a crucial financial link in the company's all-encompassing retailing chain. Much like retailing, banking has been reduced from a relationship to a commodity, and Sony understands selling—especially itself.

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Back in the 1970s, the Walkman propelled the company into the realm of the überbrand. Betamax debacle aside, Sony's high-tech overdrive has pushed it way beyond audio/visual equipment into PCs, digital cameras, cell phones, removable memory stick technology, MP3 players, robotics large and small, and the PlayStation 1 and 2 game machines. Simultaneously, the company has branched out into multimedia entertainment (movies, music) and services, including online retailing at SonyStyle.com, the So-Net ISP (Japan's fourth-largest), and cable television networks (the Asian AXN and Animax). To the Japanese public, Sony is the country's flagship company. It's not a brand; it's a way of life.

For its transformation from Walkman to bankman, the company plans for Sony Bank to function autonomously within the Sony group. Initial services are set to include yen-deposit accounts, investment trusts, credit cards, bank transfers, and bill paying. Within the first year of operations the menu is expected to expand to embrace foreign currency deposit accounts and housing loans. Capitalized at 37.5 billion Japanese yen ($306.7 million), Sony will hold virtually full control (and take most of the risk) with an 80 percent equity stake. Other partners are Sakura Bank (now merged with Sumimoto Mitsui Bank; 16 percent) and J.P. Morgan (4 percent).

Consumers shop at Sony stores and pick out Sony products. Why not pay for purchases with a Sony credit card or a Sony i-Mode phone? Or use the PlayStation 2 in the living room to debit those Sonystyle.com purchases downloaded through the Sony interactive television?

In Tokyo, Sony official Gerald Cavanagh argues there's more to the idea: "Sony is aiming to strengthen its Net-related business in areas such as life insurance, ISP, and direct marketing. And synergies between the bank and these other areas of Sony business are certainly possible. However, the bank is not positioned simply as a means of facilitating retail operations. We feel that our strong record in customer relationships and brand appeal will be important factors [in our success]." Whether the company wants to admit it or not, Sony needs the brand awareness and the complex retailing web behind it to distinguish its online effort from other bland financial offerings.

At press time, partner Sakura Bank had only about 180,000 online accounts. And after six months in operation, the online-only Japan Net Bank had managed to secure 230,000 accounts. Sony is counting on securing an ambitious 400,000 accounts in three years.

Today, most online banking services just copy real-world banking into a virtual framework—making payments, holding funds, growing long-term savings. Efforts by Japanese banks to distinguish their online service from brick-and-mortar accounts have been largely cosmetic: marginally higher interest, no service fees, and so on. Online banks point to their convenience, but ATMs—once scarce in Japan, and still a selling point for offline banking—are no longer hard to find. Moreover, in an IBM Consulting survey of what customers value in financial services, convenience stood at only 12 percent. Of far more importance to consumers were providing prompt response and quality information.

Sony knows a lot about building brand awareness and customer loyalty. Trust and consumer confidence in the company is high, and this goodwill could lead to interest in banking at a Sony financial institution. Nevertheless, the company had better get those PlayStation 2 hardware glitches fixed and start pumping out more game titles—it will need some extra cash, and soon.