5. Structural reform of our retail business

Results of the retail banking business remained flat or edged down starting in fiscal year 2008, owing mainly to slower growth of personal financial assets and diminishing returns of interest resulting from declining interest rates.

To address this situation, SMFG implemented structural reforms for the retail banking business to improve functions related to financial consulting for individuals, which was one of the five key strategic business areas in the medium-term management plan started in fiscal year 2011.

In one major example, SMBC and SMBC Nikko Securities launched new banking-securities collaboration models in July 2014, replacing the previous style in which the two partners engaged in wealth management independently. The new model was designed to encourage the two companies to offer products and services of both companies by introducing each company’s customers to the other company, which could achieve the best interests of our retail customers. The business model shifted to a group-based wealth management business. Similar mutual referral partnership programs were run by SMBC, SMBC Trust Bank and SMBC Nikko Securities, to boost the capacity to effectively meet needs of more potential customers, which resulted in steady growth in the group total balance of assets under management.

At the same time, in order to maintain medium- to long-term competitiveness in the retail asset management market, thereby achieving sustainable growth of businesses, the Group focused more on the wealth management business based on the balance of investment products. For this purpose, the Group ran a training to build up consulting skills to offer products and services that could effectively accommodate the individual needs of customers. Performance measurement framework was also revised to align with the above shift of focus in business models on a group basis.