He’s building robo investors to fill a trillion-dollar hole in Japanese society

WealthNavi’s Kazuhisa Shibayama. Photo credit: WealthNavi.

“Individual investors in Japan, especially those above 60 years of age, prefer to keep their savings in the bank,” exclaims Kazuhisa Shibayama, founder of WealthNavi. “There’s over 17 trillion dollars of personal wealth lying idle, sleeping.”

Kazuhisa’s very uncomfortable with this dynamic of Japan’s financial sector. Banks prefer to hoard these massive deposits and invest in Japanese government bonds rather than offer private credit.

“The loans-to-deposit ratio in Japan is only about 68 percent,” he explains.

According to Forbes, the ideal ratio for a commercial bank is anywhere between 80 to 90 percent.

Japan’s worsening demographic divide certainly doesn’t help the matter. An aging population means there’s more of a drain on government resources and banks find it harder to fund promising companies.

“There’s fewer opportunities,” adds Kazuhisa.

In the past this didn’t matter as much. Japanese workers, or ‘salarymen’ as they’re popularly known, were guaranteed retirement bonuses by their companies, ranging from anywhere between US$300,000 – 500,000.

But new policies mean that the amount offered is decreasing by 2.5 percent annually. “It’ll disappear completely when my generation retires in about 30 years,” explains Kazuhisa.

There’s no need to talk to a human.

That’s what’s worrying the younger generation, people in the 30-50 age bracket. They don’t have as much disposable cash, but their outlook is different. They’re not risk averse and would much prefer making long-term investments, rather than simply keeping money in the bank where annual returns are low.

“We want to cater to them – that’s our story,” enthuses Kazuhisa.

Photo credit: AP via International Business Times

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