Company history

IY Bank was incorporated in April 2001 with capital of $166.2M (¥20bn), promoted by Ito-Yokado, Seven-Eleven Japan and their affiliates under the deregulation of the financial Big Bang. The idea belonged to Suzuki Toshifumi, and it was widely dismissed: fee income alone could not sustain a bank, and retailers who played at banking would fail. What Suzuki had against the consensus was a fact from his own stores — a survey of ten thousand Seven-Eleven customers, run through the 1990s, in which demand for an in-store ATM rose every year. The bank opened in May and joined the national funds transfer system in June.

The design was the whole argument. Instead of an interest margin, Seven Bank’s income would be an acceptance fee paid by partner financial institutions for each transaction their customers made on its machines; the fee the customer paid stayed with the partner bank, whose own charge it was free to set. A bank that joined therefore shed the cost of installing, refilling and maintaining ATMs without losing the service — so Seven Bank arrived not as a rival for deposits but as a partner absorbing a cost. The founding president, Anzai Takashi, a former Bank of Japan executive director who had run the Long-Term Credit Bank, made the case to regulators sceptical of a retailer’s bank. Locked out of the megabanks’ shared ATM network, the company signed partners one at a time — and regional banks and credit unions, seeing a way to hold their customers cheaply, came so fast that partners passed 170 within six months.

From there it was a loop: more machines meant more transactions, and more transactions meant more fees. The company broke even in the year to March 2004, cleared its accumulated deficit by 2005, and was renamed Seven Bank in October 2005 as the group reorganised. In December 2007, six years and eight months after opening, it had ATMs in all 47 prefectures — 12,852 machines, 554 partner institutions, more than 470 million transactions a year — and the year to March 2007 brought ordinary income of ¥75.4bn and net profit of ¥12.7bn. In February 2008 it listed on JASDAQ. When Anzai handed over to Futagoishi Kensuke in June 2010, the model the industry had ruled impossible was the most profitable thing in Japanese retail finance.

Two things happened in March 2011. The company opened an international remittance service, aimed at the foreign workers living in Japan — some 2.07 million of them — whose small, frequent transfers home the megabanks had left underserved; the project had been started in 2009 under Futagoishi, who framed it in terms of the inconvenience those workers faced rather than the market. And the Tohoku earthquake struck, after which the ATM network became a way to get cash in the disaster zone, some machines running through the blackouts — the moment convenience-store ATMs acquired a standing as public infrastructure. In December 2011 the shares moved to the First Section of the Tokyo Stock Exchange.

By then domestic growth was bounded by the number of stores Seven-Eleven opened, and the company looked outward. In October 2012 it bought FCTI, a Los Angeles ATM operator and existing partner, for about $126.6M (¥10bn) — its first move overseas, and an attempt to reproduce in America the relationship between Seven-Eleven stores and Seven Bank machines, with 7-Eleven, Inc. running some 9,500 US stores. A further purchase of Global Axcess’s ATM business in August 2013 took the US fleet from roughly 4,400 machines to about 10,000. A joint venture in Indonesia followed in 2014 and one in the Philippines in 2019.

The American business never earned what was assumed. In September 2018, under president Funatake Yasuaki, Seven Bank announced an impairment of ¥14.6bn on fixed assets relating to FCTI and the Indonesian venture — largely the goodwill from the FCTI purchase — with a further ¥21.9bn write-down of the subsidiaries’ shares in the parent-only accounts. Net profit for the year to March 2019 halved, from ¥25.3bn to ¥13.2bn. The explanation was that cash use in the United States was already lower, competition from independent ATM operators fiercer, and one large partner bank had cancelled. What had actually been transplanted was ATM operation; what could not be was the thing that made it work in Japan — hundreds of banks wanting to shed machines of their own.

In September 2019 Seven Bank announced the fourth-generation “ATM+”, co-developed with NEC: facial recognition and fast image processing so that account opening, identity verification and address changes could be completed at the machine itself. The programme was about ¥70bn over five years to 2024, replacing all 25,000 units. The year to March 2020 was the peak of the old model — ordinary income of ¥148.6bn, ordinary profit of ¥39.8bn, net profit of ¥26.2bn — and it was also the year ATM transactions topped out at roughly 900 million. The bet was made precisely as the single-product ceiling came into view.

Then COVID removed the foot traffic the machines depended on. Ordinary income fell to ¥137.3bn in the year to March 2021 and ordinary profit to ¥35.6bn, down 7.6% and 10.5%; by the following year ordinary profit was ¥28.3bn, ¥12.4bn below its FY2018 peak. Funatake described two anxieties inside the company: the slowing of transactions under cashless payment, and the stagnation bred by twenty years of being right. The problem was not a management failure but the shape of the design — a business explicable by two variables cannot do much when one of them is set by how much cash a society uses.

In April 2021, at its twentieth anniversary, the bank adopted a purpose statement redefining itself as a provider of everyday-life infrastructure rather than an ATM operator, and in May launched a medium-term plan for 2021–2025 that called the period a second founding: ordinary income of ¥250bn by the year to March 2026, ROE above 10%, and expansion into four areas — payment platform, retail financial services, overseas, and corporate services. At the time roughly 80% of ordinary income still came from ATM acceptance fees.

The shares moved to the TSE Prime Market in April 2022, and in June Matsuhashi Masaaki became the fourth president — a technical-college graduate and systems engineer who had worked on every ATM generation from the first to the fourth, and a mid-career hire in an industry that rarely promotes them (about 80% of Seven Bank’s staff joined mid-career). His framing of the company’s own history was pointed: what the bank did at its opening, he said, is what would now be called digital transformation.

The largest structural change came from the group. In April 2023 Seven Bank announced it would take over Seven Card Service — operator of the Seven Card and the nanaco electronic money, with roughly 3 million credit members and 80 million nanaco members — and consolidated it on 1 July, putting the group’s banking and non-banking financial services under one company so that accounts, cards and payment data could be run together. The new credit-card and electronic-money segment brought in ¥26.8bn in the year to March 2024 and ¥32.5bn the year after, handling ¥792.4bn of credit shopping and ¥1.62tn of electronic money. Consolidated ordinary income reached record levels — ¥197.9bn and then ¥214.4bn — split ¥138.8bn domestic banking, ¥32.5bn cards, ¥43.5bn overseas. The single-revenue company had become a three-segment one.

The other half of the pivot is the machine itself. From September 2023, +Connect began selling the fourth-generation ATM’s capabilities to other industries — identity verification, document procedures, ticket issuing — turning a device built to move cash into a general-purpose counter, with the physical network as the asset: about 27,000 ATMs, 682 partner institutions and roughly 1.1 billion transactions a year as of March 2025, plus more than 3.5 million accounts on the My Seven Bank app. The arithmetic is still unforgiving. Ordinary profit of ¥30.3bn in the year to March 2025 remained ¥10.4bn below the FY2018 peak; operating cash flow swung to minus ¥38.9bn as the ATM replacement concentrated; and while megabanks widened their lending margins on Bank of Japan rate rises, a bank that earns fees rather than interest gained nothing from them, its shares sitting around book value. A quarter-century on, the model that was once dismissed as impossible is being asked to justify itself again.