Japan's regional banks could face deposit outflows amid a demographic shift in which people move out of nonmetropolitan areas, S&P Global Ratings said in a Wednesday release.

Small banks in areas with dwindling populations could face pressure from increased concentration of deposits in Tokyo, leading to a weaker ability to maintain deposits and a reduced business scale, the rating agency said.

The concentration shift will accelerate due to household investment into securities and competition with midsize and online banks in urban areas, S&P said.

Still, the rating agency believes the development will have a minimal effect on the overall financial system.