Outside Directors Roundtable

KiharaAll of the members are very active at every Board of Directors' meeting. Initially, the liveliness of the discussions took me by surprise. Having said that, the discussions have not become overly familiar, therefore, I got the impression that the Board was functioning in a healthy way. That inspired me to do the same, and I try to be proactive in speaking up at each meeting. For my part, as a Director, I attempt to offer my opinions from a more objective, long-term viewpoint.

HirakoWe are very frank and say quite a few things that may seem grating to those within the company. I believe that we as Outside Directors are responsible for oversight particularly with regard to conflicts of interest. We also try to closely monitor whether or not consideration is given to minority shareholders. On top of this, I feel that what is expected of me is growth -oriented governance. I hope to apply my many years of experience in management to offering useful advice that will help lead the company to sustainable growth.

HirakoI feel that the Purpose itself—created three years ago—has become quite widespread within the company. If we do not ensure, however, that the company's stated Purpose and that of the individual are united, it may become no more than an ornament. Going forward, the questions will be whether each individual is thinking about what they can achieve in terms of career development, whether they are approaching their work with a purpose, and whether or not the company is supporting them well.

KiharaI had the opportunity to be a part of the judging panel for the “Purpose Award,” and found the presentations of the eight finalists to be extremely impressive. It became clear to me that everyone in various divisions such as general affairs, sales, and development had accepted the challenge of going a step further, each aware of the Purpose of “seeing your wishes and going beyond,” and I was convinced that the Purpose is permeating the company. I sometimes get the feeling, though, that the Purpose is the final destination, and that our people may not yet have a clear idea of how they should conduct themselves in order to get there.

KiharaThe focus for the next stage of our growth is the “ATM+” concept, in which we add new services using the ATM as a platform, as stipulated in our Medium-Term Management Plan. As we have a significant advantage in holding the actual ATM hardware, I believe that the key to the next stage of our growth lies in how rapidly we can expand new services centered on our ATMs. Identity verification with the +Connect service also has the potential to become a killer application for ATMs in the future. I believe that how we can cultivate these areas into essential and appealing services for society will be the most important factor.

HirakoLocation is the strength of our ATM business. We have over 27,000 ATMs installed, all of them are exquisitely located—a perfect manifestation of “seeing your wishes.” Combining that superior location with the host of features that +Connect can provide should ensure a solid position in the market. In addition to upgrading the function of ATMs, with +Connect, we will be able to offer a variety of other services. Needless to say about convenience stores and banks, if we provide it at airports, train stations, and government offices, they stand a great chance of becoming part of the social infrastructure.
As the declining population, birthrates, and aging of society continue to progress, labor-intensive business models become more challenging. I believe that the value of nearby ATMs, which can perform a wide range of procedures on behalf of people without them having to travel far, will grow.

KiharaThree years after the start of the Medium-Term Management Plan, my primary concern is the declining profit margin. I feel that earning power has weakened. Our company still needs to grow, and we must continue to invest in order to make that happen. For this reason, I believe that going forward it is important for us to look harder than ever at how to procure funds for investment. To reduce costs, establishing targets, implementing measures and verifying their effectiveness while achieving them is essential. Since we have continued to boost sales and profits, it seems we have not had to work very hard to control costs. The time has come, however, when we must finally look at this seriously.

HirakoCurrently, the ATM platform business accounts for 60% of consolidated ordinary income. Since we have set a goal of achieving 40% of our ATM business by FY2025 through business diversification, we need to expand our non-ATM businesses, such as overseas development and our retail financial services. While firmly growing these businesses, we will also steadily develop our core ATM business. We are approaching a point where it is truly important to find ways to utilize all resources optimally—including people, goods, and money—to successfully strike this balance. In particular, I think the key issues are the positioning of investments and how to allocate capital. Closely monitoring whether resources are being used effectively is also an important role for us. We must also, of course, pay sufficient consideration to the balance with shareholder returns.

KiharaI have heard, for instance, that recruiting data scientists has been relatively easy for us, while other companies struggle to do so. I think that, while it is also important how we treat them, people who possess these highly specialized skills tend to be attracted to being involved in interesting work with discretion. I have high expectations for a human capital strategy that establishes a brand image for us as a technology company, and not as merely a bank.
As our organization continues to expand, we must be cautious that the vertical integration typically associated with large-scale growth does not lead to the erosion of our innovative corporate culture and climate, which are among our key strengths. Having experienced many of the drawbacks of vertical integration, I would like to proactively offer advice on creating effective cross-functional governance mechanisms before such issues arise.