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Japan Fintech: The Benefits of New Trends in the Fintech Industry 2022

Japan Fintech—Fintech venture capital investment is centered mainly in China and the United States, followed by the United Kingdom. The size and characteristics of the B2C markets in these nations and the countries’ status as global financial centers are the primary determinants of these rankings.

With its 1.3 billion people, China and the United States, with their 300 million people and many socioeconomic strata, each has large B2C markets. As a result of these countries’ financial difficulties, they are popular investment locations. New York City, Hong Kong, and Singapore are only some of the world’s most important economic hubs.

As a result, venture capitalists cannot expect a speedy return on their investment in Japan, despite its 130 million-strong B2C market and solid financial infrastructure (i.e., ATMs and bank I.T. systems). Therefore, attracting investors is challenging, and new financial business development lags behind other countries.

Although Tokyo is a moderately desirable hub for fintech startups, it ranks low among the world’s financial cities on a global scale. It’s hard to get regulatory permits because of the lack of openness, and it’s hard to produce new ideas because of the financial center’s innovation gap with other cities.

The Japanese government is interested in Tokyo’s potential as a financial technology powerhouse. As a result, Japan is unlikely to become a leading fintech center any time soon due to the country’s low innovation culture and low demand from consumers. Society and consumers need to be “enlightened”: society must accept fintech, and consumers’ perceptions must shift.

U.S. vs. Japan Fintech

Japan Fintech has taken different revolutions to reach its level today. What are some of the new trends in the industry?

U.S. banks employ many in-house systems engineers, which allows them to provide outcomes far faster than those of Japanese financial institutions, which lack this capability.

Using JPMorgan Chase as an example, we may examine the “sophistication” of U.S. banks’ fintech in terms of data consumption, customer reach, and the infrastructure needed to enable fintech. JPMorgan Chase collaborated with Intuit on an API, which is used to begin allowing outsiders access to JPMorgan Chase’s data in the data usage field. The company has joined with OnDeck to expedite the online loan screening process. JP Morgan JPMorgan Chase has built its blockchain platform, Quorum, with the help of 40,000 in-house systems engineers.

Similarly, Goldman Sachs is working on similar projects. Aside from reducing human headcount (from 600 to 2) and expanding internal use of Kensho, a data analytics platform, Goldman Sachs has also deployed A.I. to increase data utilization. The company established G.S. Bank, an online bank that allows users to start savings accounts with as little as $1. Goldman Sachs also supports the running firms of encrypted messaging platforms, which market participants use to interact with each other in their work. About 9,000 people work for Goldman Sachs as systems engineers, and the bank also has its in-house blockchain development team. It’s conceivable that such a well-nurtured organization supports its fintech infrastructure.

Fintech attempts in Japan, on the other hand, are stuck in the verification stage, with few moving on to execution. In contrast to the U.S. banking industry, which employs in-house experts to design new systems, the Japanese financial I.T. industry has two key traits that make it difficult to adapt. They are not very effective because they are constructed on a core banking model that centralizes authority and is a significant roadblock to new initiatives. A second requirement of the Japanese market is for I.T. systems to maintain a consistently high-quality level even when the system crashes. That’s why so little money is spent on brand new I.T. development.

When it comes to Japanese I.T. systems, they’re built like a fortress, with a thick “outside wall” for protection and an equally dense “inner core,” rendering them unsuitable for new ventures like fintech. If this situation persists, it could stifle new ideas.

Europe and North America are seeing a rise in blockchains in public and non-financial sectors, and conditions appear to be ideal for the establishment of financial ecosystems. In contrast, although financial sector initiatives are pushing forward rapidly, the public or non-financial sectors still have few success stories. Blockchains are the best method for creating ecosystems; however, their current state in Japan may postpone future ecosystem initiatives in Japan.

Payment intermediates are already the subject of legislation in Europe. Personal information and the right to consent to its use are strongly believed to be the individual’s property in most countries around the globe.

API-based financial services have been made more readily available in Japan, thanks to changes to the country’s Banking Act. As a result, it is vital to educate society on the importance of transitioning to services that employ personal data before they can be widely adopted. On the industrial side, APIs enable ecosystems to be formed, and ecosystems that allow enterprises to use that data to give services to customers are critical.

Japan became the first country to clarify its legal position on cryptocurrencies by changing its laws and regulations on funds settlement. The Japanese government has cleared the path for introducing procedures to protect users and facilitate transactions in cryptocurrencies by specifying how cryptocurrency exchange service providers would be treated. Digital currencies have also been more successful in Japan than any other country, implying that the government is the only one attempting to popularize e-money. We may predict a healthy increase in initial coin offerings if further development can be realized.

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