Mizuho Financial Group Inc’s (8411.T) corporate culture is to blame for its long history of tech system failures, creating an atmosphere where managers are reluctant to express opinions and unable to respond well to crises, an investigation found.
The damning report was commissioned by Japan’s third-largest lender after four system breakdowns between February and March this year, which came despite the bank having spent more than $3.6 billion to overhaul its systems in 2019. That revamp followed two large-scale breakdowns in 2002 and 2011.
The third-party report said Mizuho rotated tech staff too often which prevented the accumulation of knowledge and that managers were too hesitant to question the status quo.
“The atmosphere within the company is one where managers believe the best course is to take the stance that they have done what they are supposed do rather than taking the risk of actively expressing their opinion. This contributes to a lack of positive and proactive action on their part,” the report said.
Ten years ago when Mizuho reported system failures, the country’s financial watchdog told the bank there was a problem with its culture.
“Our corporate culture hasn’t remained the same, but it’s also true it would not easily change,” Chief Executive Tatsufumi Sakai told a press conference on Tuesday.
One of the glitches this year affected most of its ATMs, leaving customers unable to retrieve thousands of bank cards and bank books stuck inside in the machines.
“I came to know the ATMs breakdown through internet news,” Koji Fujiwara, the head of Mizuho’s main banking unit, told reporters, highlighting how Mizuho was slow to share information with its management.
Mizuho said it would set up an internal committee to prevent recurrences and plans to recruit executives from tech companies to improve know-how.
Sakai will have his pay halved for six months to take responsibility for the problems, while Fujiwara will take a 50% pay cut for four months.
“We, as a whole organization, strongly recognise it’s necessary to take fundamental preventive measures in order not to let such issues happen again,” Mizuho said in a statement.
Mizuho did not, however, announce Fujiwara’s resignation which had been flagged by domestic media.
The report was compiled by a four member team led by lawyer Shuji Iwamura and also including another lawyer, a former Fair Trade Commission official and a former NTT DoCoMo executive.
Mizuho’s shares closed up 0.4%.