Japan's financial institutions have not been laggard in their introduction of new information technologies. In fact, they have actively invested in them. But coping with the most recent set of advances requires them to transform their basic way of doing business. The preferred form of organization is flatter and more decentralized than that under which they presently operate. But the problem is that they seem unable to achieve this switch.
Size is no longer the advantage it used to be.
What is more important now is network strength. Given the rising levels of complexity and the limits on management resources, it is no longer efficient for each organization to try to do everything in house. The present organizational structures and operating procedures of Japan's financial institutions appear not to match the requirements of the trends in information technology. Making them fit these trends will require a fundamental transformation of modus operandi. This is yet another component vector determining the direction of the reform we must seek in the financial sector.