Due to negative interest rates lenders are now opting to leave data with Amazon Web Services

November 28, 2017 – Nikkei Asia Reviews

The Bank of Japan’s January 2016 decision to introduce a negative interest rate has had ripple effects throughout the economy, but one unexpected beneficiary has been Amazon Web Services.

The Amazon.com subsidiary currently serves more than 100,000 companies in the country, up over fivefold from approximately 20,000 in 2013, as financial institutions increasingly jump on the cloudwagon.

As they do, service providers see a huge potential market in Japan, one that had been held back by a banking sector which was reluctant to use outside cloud service providers. The financial industry’s apprehension began to melt after the Mitsubishi UFJ Financial Group contracted with AWS.

Now an avalanche of regional banks are jumping aboard as BOJ’s negative rate is biting into their profits and forcing them to cut costs. They are also realizing that AWS’s security is actually much higher than that of their own systems.

Amazon has another huge benefit in Japan: It beat rivals Google, Microsoft and Oracle to the market.

AWS provides cloud computing platforms for companies and individuals worldwide, logging $12.2 billion in global sales in 2016, up 2.6 times from 2014. Sales for the first three quarters of 2017 have already topped the yearly total for the previous year.

The company’s sales are estimated to be larger than the combined sales of 14 major rivals.

Use of AWS began to grow in Japan after the company opened a data center in the Tokyo metropolitan area in 2011. A backup data center is scheduled to open in the Kansai area of western Japan in 2018.

A lot of demand is coming from banks. “Inquiries from financial institutions have been increasing sharply in 2017,” said Tadashi Okazaki, head of Japan Solution Architect at AWS Japan.