How Japan's Financial Industry is Dealing with Talent Shortage

Updated: 08 Jul 2025, 04:06 AM IST

A look at how Japan's financial industry is coping with a severe talent shortage, with regional banks struggling to attract experienced professionals.

Japan's Financial Industry Faces Talent Shortage

In Japan, the financial industry is grappling with a significant talent shortage, with even major banks finding it challenging to recruit experienced individuals. Regional banks, in particular, are struggling to compete with Tokyo-based institutions that offer higher salaries.

One rural bank, Yamanashi Chuo Bank Ltd., has taken a unique approach to address this issue by creating an in-house investment advisory firm. By setting up this firm, the bank hopes to attract talented individuals to manage its substantial securities portfolio.

Challenges in Compensation Plans

Japanese banks often have limitations on how much they can compensate individual employees, making it difficult to offer competitive pay packages. Yamanashi Chuo Bank's decision to establish an internal company allows it to bypass these constraints and offer more attractive compensation packages.

Investment Advisory Firm

The investment advisory firm, launched last year, currently has two employees who provide guidance on the bank's investment strategies. With billions of dollars invested in securities like Japanese government bonds and stocks, even small regional banks in Japan are looking for ways to manage their excess deposit funds efficiently.

Strategies for Growth

Yamanashi Chuo Bank plans to expand the role of the advisory firm in managing more of its assets, potentially leading to an increase in staff numbers. The bank is also seeking to offer investment advisory services to external clients, such as other financial institutions and non-financial corporations.

According to President Yoshiaki Furuya, the bank is cautious about its market operations and is waiting for the right time to make long-term investments in securities. While the bank's market team is currently based in Kofu, there is a possibility of relocating them to Tokyo to access more employment opportunities.

Addressing Market Volatility

With increasing market volatility, local banks in Japan are recognizing the need for external specialists who can navigate turbulent markets and optimize asset performance. Yamanashi Chuo Bank's strategic investments in securities reflect its long-term revenue generation goals and risk management strategies.