Photo/Illutration An inside view of a Sumitomo Mitsui Trust Bank branch in Osaka (Asahi Shimbun file photo)

Japanese financial institutions are vying to become legal guardians of elderly people who have no one to carry out their last wishes or suffer from dementia and other cognitive illnesses that cause impaired judgment.

The service has enormous market potential. A Cabinet Office survey found that 5.92 million senior citizens were living alone in Japan in 2015. In 2040, the figure is projected to climb to 8.96 million.

Those without family members typically engage lawyers or nonprofit organizations to act as legal guardians. But financial institutions are moving into the market, touting their organizational and trust power.

“From now on, the important point for us is to consider how to add non-financial services,” said Masaru Hashimoto, president of Sumitomo Mitsui Trust Bank.

In September, the bank set up an incorporated association managed by retired employees to support elderly customers.

The association provides services for elderly customers beyond those offered by the bank that give them a sense of security. For example, it can arrange admittance to an old age home and deal with procedures to enter and leave hospital.

Customers can depend on them to handle funeral arrangements, execute a will and manage properties. This is of particular benefit to those suffering from dementia or other cognitive illnesses.

Customers are charged commission fees for services they request. Expenses for medical care, senior citizens' homes and funerals are deducted from funds the bank holds in trust.

Sumitomo Mitsui Trust Bank is pitching its guardian service to affluent senior citizens in areas around Tokyo. A woman in her 70s living in the capital who is an only child and single with no children was the first individual to sign up.

Initially, the woman planned to appoint a lawyer as her legal guardian, but then worried she might outlive that person. She also was worried about the disposal of her personal possessions and eventual funeral arrangements.

“She trusted our bank since she is a long-time valued customer,” said Masahiro Nakashima, manager of the association's consulting division.

The organization is considering expanding its target areas and customer profiles after observing how its services are received in areas around Tokyo.

SHINKIN BANKS PIONEERED SERVICES

Shinkin banks, or credit unions, spotted business opportunities for guardian services early on.

In January 2015, five shinkin banks with branch offices in Tokyo’s Shinagawa Ward, one of which is Johnan Shinkin Bank, formed an incorporated association focused on elderly people in the ward.

The association has contracted with 27 seniors, mainly those with weakened cognitive abilities, as their legal guardian. In addition, it has concluded contracts as a voluntary guardian with 47 people who are still active.

“Since shinkin banks are closely involved in communities, we see obvious demand from the rising number of elderly people for this service,” said Hitoshi Hiramori, who heads the secretariat of the association.

Hiramori said he is keen to share ways to provide legal guardian services with shinkin banks nationwide.

Though the service may not be profitable for shinkin banks as it requires many staff members, Hiramori said he expects the effort will pay off for shinkin banks in the long-term.

In 2017, shinkin banks in Numazu, Shizuoka Prefecture and Hanamaki, Iwate Prefecture started offering legal guardian services.