UPDATE 1-Japan's KDDI, MUFG to launch online bank

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TOKYO, June 17 (Reuters) - The Bank of Tokyo-Mitsubishi UFJ and phone company KDDI Corp (9433.T) have received a license to set up an online bank as both seek to retain customers in competitive markets.

Dubbed Jibun Bank, or "me bank", the 50-50 joint venture between the unit of Japan's largest bank, Mitsubishi UFJ Financial Group Inc (8306.T), and the No.2 phone company see opportunity in a market that remains wary of credit cards.

Banks and telecom firms alike are using increasingly creative tactics to keep hold of customers while winning new ones from rivals.

By winning KDDI's subscribers with banking services accessible by mobile phone, the new bank is shooting for 2.4 million accounts with deposits totaling 1 trillion yen ($9.27 billion) in the year starting April 2010.

It aims to raise that to 3.4 million accounts and 1.5 trillion yen in two years.

KDDI and No.1 mobile phone carrier NTT DoCoMo Inc (9437.T) and No. 3 carrier Softbank Corp (9984.T) all seek new ways to woo users following a year of price cuts.

"Our objective is to make KDDI phones the most convenient cellphones on the market, and the safest way to transfer money," KDDI Chief Executive Tadashi Onodera told reporters at a news conference.

Unlike a traditional bank, which generates revenue from taking lending risk, Jibun Bank will rely on a lower-risk business model that is driven by fees.