By Kentaro Otsuka

Yomiuri Shimbun Staff Writer

When Mitsubishi UFJ Financial Group Inc. $(MUFG)$ was formed 20 years ago, the system integration between The Bank of Tokyo-Mitsubishi Ltd. and UFJ Bank Ltd., its two predecessor banks, became a focal point. It was a massive project with a total investment amounting to 250 billion yen.

Toshiki Ochi, managing corporate executive of MUFG, who participated in the system integration from the former UFJ Bank, said one key factor for the successful integration lies in the fact that not only the systems department, but also the management and business departments became involved in the project. Ochi, 57, who subsequently worked across various system departments, spoke about the circumstances at the time and lessons learned for the present during an interview with The Yomiuri Shimbun.

The following are excerpted from the interview.

The Yomiuri Shimbun: The system integration was implemented in two phases: "Day 1," which involved making the former banks' systems interconnectable, and "Day 2," which consolidated the systems into one. How were the two phases conducted?

Toshiki Ochi: Day 1 was originally scheduled for completion in October 2005 (when MUFG was established). However, during the integration process, concerns arose that "testing might not be sufficient." To ensure system quality, we extended the timeline. Consequently, the integration as Bank of Tokyo-Mitsubishi UFJ Ltd. (now MUFG Bank Ltd.) was delayed until January 2006. By prioritizing a realistic and safe process and not being concerned over minor schedule changes, Day 1 was executed with virtually no issues.

Regarding Day 2, I believe a few factors contributed to its success. One was that, regardless of whether it was the best choice, we properly aligned with one of the legacy systems (of the former banks). If we had tried to half-heartedly cherry-pick the best parts (of each system) to build an entirely new system, we would have faced significant difficulties. Another factor was that the project wasn't left solely to the systems department; the management and business units were deeply involved as well. It was a bank-wide project, with regular reports going all the way up to the president.

For about six months before a decision was reached on which bank's system would be used as the core, there were intense debates. Ultimately, the frontline teams couldn't resolve it, and top management decided to align with the Bank of Tokyo-Mitsubishi system. However, we incorporated a UFJ Bank system enabling 24/7 ATM operations into the Bank of Tokyo-Mitsubishi system.

Yomiuri: Since 2021, you've been implementing the "architecture strategy" to fundamentally overhaul your systems as part of a ten-year plan. What was the reason behind formulating the strategy?

Ochi: Since completing Day 2 in 2008, we've been reforming systems like those in our branches, but the underlying technology hadn't changed that much. Around 2017-2018, concerns arose over the sustainability of our complex, tightly intertwined core banking systems.

At that time, European and U.S. banks were modernizing their system designs. We began considering that MUFG Bank's core systems also needed modernization, transforming tightly coupled, entangled systems into loosely coupled ones. The programming languages we used and the mainframes themselves were becoming obsolete. It's not that something was actually happening (to our bank) in 2017. President (Hironori) Kamezawa often said, "We do this project so we won't look back in ten years and regret not having done it."

Yomiuri: Your "digital bank," scheduled to start operations in fiscal 2026, has positioned its ability to flexibly update functions as a selling point, using cloud systems instead of traditional mainframes. Why is a digital bank necessary while investing heavily in overhauling existing systems?

Ochi: It's not that we're replacing all 34 million MUFG Bank accounts with the digital bank. The core issue is recognizing that we need a bank capable of responding more quickly and flexibly -- one not based on core banking systems (which require significant time and effort for updates) -- to attract customers with digitally oriented preferences who choose MUFG. That's the mindset driving this challenge.

I believe migrating all 34 million accounts' core systems to the cloud immediately would be risky and difficult. By taking on the digital banking challenge, we want to use it as an opportunity to learn what is difficult about cloud systems and what we need to consider.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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October 22, 2025 22:43 ET (02:43 GMT)

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