AIFUL's transition to a comprehensive financial services strategy

Since AIFUL's founding in 1967, the Company has grown in tandem with the unsecured loans market. However, as this market matures and competition steps up, coupled with a shrinking customer base resulting from Japan's aging population, a management strategy focused on unsecured loans alone would lead to a stagnation of growth in both loans outstanding and profits. In the U. S., similar developments in the retail finance market have actually produced a decline in the number of companies with a monoline structure specializing only in sub-prime loans; companies that have diversified its financial product offerings and focused on comprehensive development, however, have survived and grown.

If we look beyond unsecured loans and inspect the entire consumer credit market, there remains promising growth potential in the markets for credit cards and business loans. Having identified this, AIFUL adopted its comprehensive financial services strategy, commencing full-scale operations in these areas 8 years ago. Indeed, to ensure profitability, stability and growth, AIFUL's strategy for overcoming a saturated unsecured loan market was to expand its reach by diversifying products and customer acquisition channels, to encompass the entire consumer credit market. The Company is already an all-inclusive retail financial services company, primarily due to its acquisition of LIFE, which has large shinpan (installment-sale financing) and credit card operations. The added lines of business over AIFUL's core consumer-finance concern, such as shopping and cashing in connection with the credit card business, financing of installment sales, and the bank credit guarantee business, have also helped boost the Company's profitability.

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