Interview conducted on November 4, 2025.
Before we begin the core of our discussion, I’d like to start by asking about the impact of Japan’s monetary policy and the recent changes in interest rates. For decades, Japan operated under an ultra-low and negative interest rate environment. However, this period has come to an end. Beginning in 2024, the Bank of Japan moved away from its long-standing negative interest rate policy, and since then, interest rates have risen to above 0.5%, making a clear shift foward monetary normalization. For regional banks like yours, whose business models are centered on individual and corporate deposits, retail and SME lending, as well as securities investment, there are naturally both advantages and disadvantages to this new rate environment. From your perspective, how has this change in monetary policy impacted the banking sector?
As you mentioned, this shift in policy interest rates comes with both positive and negative aspects. However, I believe the benefits outweigh the challenges. One of the key indicators here is that the normalization of interest rates is in itself a sign of economic recovery and strength. That’s a positive signal, not just for the broader economy, but also for us at the Bank of The Ryukyus.
Founded in 1948, the Bank of The Ryukyus has just marked its 77th anniversary. Over these decades, we’ve built a deep trust with our local customers, and today we hold the top market share in both deposits and loans within Okinawa Prefecture. That solid foundation means that as interest rates rise, we are well positioned to generate strong capital flows and increased profitability. That, I believe, is one of our competitive advantages in this new environment.
You mentioned that the Bank of The Ryukyus holds the top market share in Okinawa. Could you elaborate on the scale of your customer base in both individual and corporate segments?
Certainly. Okinawa has a population of approximately 1.46 million people, and we currently serve about 950,000 individual customers, which accounts for around 65% of the local population. On the corporate side, we work with over 60,000 business entities, broadly covering business establishments across the region. This broad customer base is a vital foundation for our business and a testament to the trust we’ve earned over the years.
While the rate hike has clear benefits, some challenges were also mentioned, such as potential mark-to-market losses on securities. How has your bank managed these risks?
That’s an important point. During the negative interest rate era, we adopted a conservative investment strategy. We avoided taking excessive interest rate risk and mainly invested in short-term bonds. As a result, the recent rate increases have had limited negative impact on our portfolio. Of course, there are valuation changes, but we believe they remain within manageable limits.
More importantly, rising interest rates also open up new opportunities such as lending at more favorable margins. We’ve actually been waiting for this type of environment to return. It enables more balanced financial operations and allows us to offer more attractive products for our customers.
Photo: Nacása & Partners Inc. (Satoru Umetsu)
Turning now to Okinawa’s position in the global investment landscape last year, foreign direct investment into Japan reached 50 trillion yen, and this number is expected to grow significantly by 2025. Given Okinawa’s strategic location at the crossroads of Southeast Asia and the Asia-Pacific, it seems well placed to become a hub for both inbound Japanese and regional investment flows. How do you view this trend, and what role do you see your bank playing?
Okinawa’s economy is heavily reliant on tourism, which makes us an appealing gateway for international investors looking to enter Japan or expand into Asia. In this context, I see the Bank of The Ryukyus playing a key role as a first point of contact–a kind of trusted advisor for overseas investors.
We’ve accumulated substantial experience in supporting the development of tourism-related infrastructure, including hotel construction projects. Within our group, we also operate a think tank the Ryugin Research Institute, which conducts comprehensive research on local economic conditions, particularly in the tourism sector, and provides strategic policy recommendations to the Okinawa Prefectural Government.
We also have a solid track record in syndicated lending, including major hotel projects and leisure facilities such as JUNGLIA. These experiences make us a capable and trusted partner for investors looking to understand local conditions and identify credible business opportunities.
In fact, we’ve had discussions with major players such as Malaysia’s Berjaya Group, and we’re proud of the role we can play in facilitating meaningful investment in Okinawa.
Let’s now shift to the topic of transformation particularly digital and sustainability related changes. You’ve made notable strides in digital transformation. Could you elaborate on how you’re incorporating new technologies into your operations, and what role you see for digital innovation in supporting both the bank and the Okinawan community?
We began our digital transformation quite early. In 2016, we rolled out iPhones to all employees, and by 2021, we had fully implemented Microsoft 365. These moves helped drive internal digitization and workstyle reform. In fact, we were one of the first regional banks in Japan to adopt these tools, and other institutions including Resona Bank visited us to observe our model.
Externally, we’ve launched a range of DX initiatives–not only within the bank, but also to support Okinawa’s broader digital ecosystem. One clear example is our contactless payment initiatives for public transportation, developed in partnership with Sumitomo Mitsui Card Company. As part of the rollout, we’ve actively introduced international-brand tap-to-pay across Okinawa’s public transit network: not only on the Okinawa Urban Monorail (“Yui Rail”), the prefecture’s only rail system, but also on buses operating in remote island areas. And perhaps most unexpectedly, tap-to-pay is now available even on the water buffalo cart that travels between Iriomote Island and Yubu Island in Taketomi Town.
Since January 2017, the Bank of the Ryukyus has brought card acquiring operation in-house, enabling us to engage more directly with Okinawa’s expanding electronic payment market. While only a limited number of banks in Japan conduct acquiring operations directly within the bank itself, we are one of them–and we are also actively involved in the deployment of payment terminals across the region. Through these efforts, we aim to support regional economic growth and inbound tourism from a revenue perspective, while remaining at the forefront of both technology adoption and innovation in financial services. Ultimately, our goal is to make Okinawa a “Cashless Island”.
Cashless payment introduced for water buffalo cart rides
Let’s discuss your sustainability finance efforts. You’ve introduced initiatives like Positive Impact Finance, collaborated with NTT Data to introduce a platform that visualizes carbon emission and provides it free of charge to clients, and have been offering a green mortgage initiative focused on ZEH (Net Zero Energy Homes). How are these programs supporting the decarbonization of Okinawan households and businesses?
Okinawa has a unique emissions profile. Unlike prefectures with large industrial bases, most of our CO2 emissions come from the residential and commercial sectors. Recognizing this, we decided to focus on promoting residential buildings with high thermal insulation and energy efficiency.
Our green mortgage program supports customers who invest in ZEH housing by offering tailored financing. More than just a loan, this product establishes a mechanism to measure and verify CO2 emission reductions achieved by each supported project. The resulting reductions are converted into J-Credits, which are sold, and the proceeds are reinvested in decarbonization initiatives in Okinawa–creating a virtuous cycle that further accelerates CO2 reductions.
We’ve also faced a challenge unique to Okinawa–most homes here are built from reinforced concrete to withstand typhoons, whereas Japan’s national ZEH incentives tend to focus on wooden structures. That’s why we created the “ZEP Ryukyu (Ryukyu Net Zero Energy Partnership),” a partnership with local construction companies, architects, and other related professionals.
This reflects our commitment to finding locally relevant solutions to global challenges. The traditional Okinawan home with its tiled roofs has given way to post-war concrete architecture shaped in part by the presence of U.S. military forces. Our aim now is to combine that architectural resilience with environmental sustainability.
Your new medium-term business plan through 2028 sets ambitious goals. Could you outline your top financial and strategic priorities?
The plan is progressing well. Our target is to achieve an ROE of 5.5% or more within three years, and we’re on track. I can say that we’re very pleased with our current trajectory.
Beyond core lending and deposit services, we are expanding into consulting and advisory offerings, as well as launching new initiatives in PFI (Private Finance Initiatives) and startup support. These are two areas where we see real potential for growth.
At the same time, sustainability remains a central pillar. Okinawa’s pristine natural environment is not only a tourism asset it’s also a responsibility. That’s why we’ve committed to the UN’s Principles for Responsible Banking (PRB). Among Japanese regional banks, we’re one of just three signatories, along with Shiga Bank and Kyushu Financial Group.
Okinawa’s unique culture
You’ve made startup support a key priority. You’re operating the BOR Venture Fund and offering mentoring programs. What results and insights have emerged from these efforts so far?
We’ve been supporting startups in Okinawa for over 10 years through the Okinawa Startup Program, which includes pitch contests and networking events. Most recently, we significantly scaled our investment capabilities. The first and second BOR Venture Funds were about 200 million yen each, but our third fund is 2 billion yen ten times larger.
In parallel with the establishment of our third fund, we launched BOR Venture Debt to provide loan-based funding in addition to investment. One of our strategic partners is SEVENRICH Accounting, and in addition to venture debt, we will work closely with them to support startups in areas such as BPO ( Business process outsourcing).
As regional startups seek rapid growth, they often need to expand beyond the limits of local markets into the Tokyo metropolitan area. Although geographical distance and information gaps can pose challenges, working with metropolitan partners like SEVENRICH, which has a strong network, help bridge those gaps. We’re also partnering with OIST the Okinawa Institute of Science and Technology which is ranked ninth globally for basic research. OIST is deeply committed to innovation, and we’re aligning with their initiatives to support high-impact startups.
One standout example is EF Polymer, founded by an entrepreneur from India. After developing the core technology concept in India, the founder was selected for OIST’s accelerator program as well as the OKINAWA startup Program, and went on to establish the company’s headquarters in Okinawa in 2020. They’re developing biodegradable polymers for agriculture and gaining significant global attention. Supporting such ventures aligns perfectly with our mission to cultivate innovation in Okinawa.
Beyond startups, do you see a role for your bank in attracting new industries or technologies to Okinawa?
Absolutely. In August, we signed a formal cooperation agreement with OIST. Our vision is to bring cutting-edge technologies and emerging industries into Okinawa. We’re aligned with initiatives which aim to position Okinawa as a future-oriented innovation hub. As the region’s leading bank, we see it as our responsibility to actively support these efforts.
Okinawa’s rich natural environment
Your bank is celebrating its 78th anniversary this year. If we were to return in two years for another interview, what would you hope to have accomplished by then?
When I became president, I made it my mission to focus on people. I believe that developing talent is one of the most important responsibilities of any leader. Two years from now, I hope to show you a team that’s even more capable, more empowered, and deeply committed to serving Okinawa’s future.
Even during the pandemic, we made the counterintuitive decision to increase hiring. We’ve brought in a large number of young professionals because we believe human capital is our most valuable asset. Everything we do digital, green finance, startup support ultimately depends on the strength of our people.
When you return, I’d love to welcome you for the next interview at our new headquarters.
That would be a pleasure. I look forward to it. Finally, our readers include global CEOs, decision-makers, investors, corporate executives, and travelers. If you had to summarize what The Bank of The Ryukyus stands for in a single sentence, what would that be?
Everything we do is for the people and future of Okinawa guided by love and a deep commitment to this region.
Mr. Shimabukuro, thank you so much. It was a true pleasure to speak with you and learn about your vision and initiatives. We look forward to returning in the future.
Thank you very much. I look forward to welcoming you again soon.
For more information, please visit their website at: https://www.ryugin.co.jp/english
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