Reorganization of Japanese agricultural cooperatives’ branch network: responding to changing local needs and strengthening interactions with members

March 1st, 2019
Norinchukin Research Institute Co., Ltd.
TAKAYAMA Koki, Senior Economist


Financial institutions, which have relatively been inactive in reorganizing their branch network after 2010, are seen increasing mergers and closures of their branches again in recent years in Japan. This is mainly because the use of financial institutions’ branches is declining due to the spread of online banking services and the shrinking customer base along with predicted depopulation. Financial institutions are also facing the need to step up streamlining of branches to cope with revenue decrease, as well as increasing the size and operational efficiency of branches to respond to customer demand for higher levels of service such as advisory services.

The situation is even severer for agricultural cooperatives (JAs), as their branches are smaller in size compared to branches of other financial institutions. Also, many of them have not been renovated for a long time, and they appear not to be dealing with changes in the surrounding environment. The key to successful reorganizing of the branches is to build a consensus among the members because agricultural cooperative’s branches are also used as a place for members to conduct various activities.

Cases of reorganization at four agricultural cooperatives shown in this paper indicate the importance of sharing the challenges of their branches with the members. And at the renewed branch strengthening the role as a base for branch activities, etc. with considering the accessibility of renewed branches’ area members, suggests possibility to shorten the relation and distance to the region area.


Financial institutions’ branches function as the most fundamental channel linking customers and the institutions. Customers use the branches for a variety of reasons, ranging from cash deposits, withdrawals and transfers, and balance inquiries to receiving advice on loans and asset management. Amid advancing digitization of financial services, however, fewer people use the branches for basic financial transactions, and now that the population of potential customers itself is on a declining trend, more financial institutions are setting on reorganizing their branch network.

Compared with branches of other financial institutions, JAs’ branches are small and tend to be old. Many JAs might need to reorganize their branches, but there are fears that the reorganization could make JA less convenient for their members. Since the branches also function as bases for members to conduct various activities, the key to successful reorganizing is to build a consensus among the members.…Link reading

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