Sometimes I don't understand Japanese business logic?

[RMA]

Ok so today I found below message in my inbox from Rakuten Bank:

Quote

外貨定期預金　優遇金利
適用期間が間もなく終了します

外貨定期預金　優遇金利の適用期限が
間近となっておりますことをお知らせいたします。

優遇金利　適用期限：2021年05月28日まで

【対象者さま限定】
ＮＺドル金利が通常の２倍！

ＮＺドル
7日もの

通常金利

年12.00％（税引後 年9.562％）
2倍
適用優遇金利
年 24.00 ％ （税引後 年19.124％）
(円から預入時のみ）
2021年05月17日から2021年05月28日までの限定金利！

Unquote

Seeing 24% p.a. interest on a major currency like New Zealand Dollar, I immediately knew there must be some catch so I thought of investigating it further.

The first catch was that this rate will be applicable on the deposit for 7 days period only. I thought still not bad.

Then I saw it will be applicable only when depositing from yen. So I went to check their exchange rates which were 79.01 (sell) and 78.09 (buy).

The maximum deposit amount can be NZD 100,000 so let's do some calculations. Assuming there is no change in the exchange rate in next 7 days, customer would pay JPY 7,901,000 and get back JPY 7,809,000 plus earn interest JPY 28,977 (i.e., NZD 100,000 x 79.01 x 0.19124 (after tax rate) x 7/365) so they would be losing JPY 63,023.

Now who in their right mind would take this offer? I mean this is their special campaign offer, they must have thought something or done meetings before sending this offer to their customers. Either they don't think anything before finalizing special offers or they think the customers are plain stupid.

Is there anything I am missing here? Who are there target customers for this special offer? It may make sense to those who anyway wanted to buy New Zealand dollars but if I wanted to buy NZD 100,000 I would look for best price options rather than falling for 7 days interest on such crappy exchange rates.

[captainspoke]

I've seen some of those teasers at shinsei, but never did the math--or bought into that kind of deposit.

Thanks for the numbers.

[Beaglehound]

Yeah, my local bank tried to sell me something similar, then kind of agreed when I suggested that it was basically currency speculation. Not attractive.

[mighty58]

I had to chuckle at that, thanks for the numbers. The business logic is quite clear: rip off the customer with opaque fees, while loudly marketing some crazyily attractive-looking interest rates and hiding the currency speculation risks (or conversely, appealing to the gamblers instinct).
And bankers wonder why they get a bad rap. I really hate Japanese banks, they've got no shame.

[RMA]

Yeah, my local bank tried to sell me something similar, then kind of agreed when I suggested that it was basically currency speculation. Not attractive.

Exactly! I don't understand their business logic. They spend so much time in meetings and then come out with such campaigns. It's such a waste of time and money. The whole point of campaigns is to get maximum customers subscribe to it. If they want more customers to use their FX markets then they should think how to offer better rates etc. and if cannot then they should do nothing (at least that would save some costs).

[RMA]

I had to chuckle at that, thanks for the numbers. The business logic is quite clear: rip off the customer with opaque fees, while loudly marketing some crazyily attractive-looking interest rates and hiding the currency speculation risks (or conversely, appealing to the gamblers instinct).
And bankers wonder why they get a bad rap. I really hate Japanese banks, they've got no shame.

But I wonder who falls for that? Don't Japanese customers do their math. Even if these bankers trap few suckers, still they wouldn't be able to cover their campaign costs (like printing brouchers, advertising etc.)

[jcc]

Yeah, my local bank tried to sell me something similar, then kind of agreed when I suggested that it was basically currency speculation. Not attractive.

Exactly! I don't understand their business logic. They spend so much time in meetings and then come out with such campaigns. It's such a waste of time and money. The whole point of campaigns is to get maximum customers subscribe to it. If they want more customers to use their FX markets then they should think how to offer better rates etc. and if cannot then they should do nothing (at least that would save some costs).

It's easier to make money off suckers than it is discerning customers.

It's a lot less work to come up with some stupid campaign than figure out a low margin product and find the (intra-company) political goodwill to implement it and then stick to it in the long-term waiting for discerning customers to find it. There are good products out there, but marketing costs also add to costs so the really good stuff is going to be relying on word of mouth for discovery. It also doesn't come with kick-backs for promoting it, so it doesn't get visibility.

It's why communities like this are important in discovering a good product and spreading word of mouth for it.

[RMA]

It's why communities like this are important in discovering a good product and spreading word of mouth for it.

Exactly, without this community I wouldn't be able to discover emaxis slim funds soon and would be so lost.

[TJKansai]

I have seen plenty of teaser rates offering something unbelievable, like 10%, then fine print that it is only for the first week... .01% after that, for a 12-month term.

I did jump on a couple when the term was short and I had plans to send money out of Japan soon after.

[robster]

I would go as far as to call that fraud. The banks must be paying whatever watchdog there is to stay snoozing while they rip off naive customers.