On 2 October the Roppongi Bar Association hosted a panel together with Foreign Chambers of Commerce in Japan to discuss recent changes in Japan’s fintech environment. The panel was comprised of financial technology (fintech) related vendors, users, thought leaders and legal practitioners. The discussion started with an introduction from each of the panel members providing a brief background of what role their organisations play in fintech. The event was held at Nishimura & Asahi.
ANZCCJ Member, Mr. Paul Chapman, CEO & Founder of Moneytree shared insights from an Australia and Japan perspective. Moneytree is a Japanese fintech company founded by an Australian and three Americans and acts as a financial data platform. People and businesses store and share their confidential financial information like cashflow data, credit ratings, banking transaction history and other digital financial data which can be used for a wide range of purposes. https://moneytree.jp/
Other speakers included:
Ms. Christine Lee of Ground X, a blockchain related subsidiary of Kakao, and an attorney admitted in Japan. Kakao is a platform that covers various industries such as taxi, bank, and music. They have been working on developing the system to ease the usage of Fintech in Korea. More info online: https://www.kakaocorp.com/?lang=en;
Mr. Spyridon Mentzas, former head of equities at Mizuho Securities, and current fintech entrepreneur. Founded a company called ‘Hijojo Partners’. This company offers an online platform for investors to buy and sell securities. More info online: https://www.hijojo-partners.com/en/;
Ms. Anri Okamoto, General Counsel for Mercari, and an attorney admitted in Japan and New York. Mercari is an online second-hand market place (mobile version of E-bay) operating in Japan, US and UK with around 1,000 employees. In the future, the company is looking to to implement a mobile payment system which would allow customers/suppliers on the net to use up their credit at the convenience store. More info online: https://www.mercari.com/;
Mr. Jeff Wentworth, Co-Founder of Curvegrid which uses a blockchain server to make it easier, faster and less expensive to build business application on the blockchain. The company is based in Tokyo, Japan. it https://www.curvegrid.com/;
Ms. Kristina Yasuda, Director of Digital Identities at the InternetBar.org and Consultant with Accenture Strategy; InternetBar.org was founded “to be a bar organisation for the Internet. Traditionally, bar associations connect, educate and define professional standards for those who are members (lawyers). Because the Internet is global and involves a multi-faceted set of participants, all contributing to the normative behaviour of online interaction, IBO includes anyone – activist, lawyer, technologist, advocate, student, entrepreneur – who wants to be a part of making the Justice Layer become a reality through education, prevention, access to tools, and empowerment of the individual in the justice system through arts and culture”
Mr. Tony Andriotis of Hughes Hubbard & Reed and the Greek Chamber of Commerce in Japan (Moderator); and
Mr. Susumu Tanizawa (Moderator) and Ms. Chika Igarashi (Alternate Moderator) of Nishimura & Asahi.
A number of issues were discussed and by the end of the night it was clear there were a number of opportunities for fintech start-ups in Japan, especially in light of Japanese banks increasingly opening themselves up and digitising their services more. Panelists had a range of views about Japan being “behind” other developed economies on fintech development. A large economy like Japan’s takes time to adjust to market forces – the major banks cover a huge customer base. Paul Chapman thought this was perhaps “The 1.5 Dilemma” for Japan. Japan invents something at 1.5 when the rest of the world is focused on 1.0 – the Japanese flip phone that connected to the internet as an example - but the result being Japan would tend to delay its adoption of 2.0 once the rest of the world had got to this (for example the “smart phone” as we now know it today took time to penetrate the Japanese market).
The Japanese consumer is somewhat reluctant to shift away from a predominantly cash-heavy society, to using online financial services and web platforms, despite the Japanese government’s efforts to modernise the Japanese banking system. This is due to a number of factors: In terms of credit cards, Japanese consumers are reluctant to spend money they can’t see. Instead, the typical Japanese consumer wants visual acknowledgement of how much they spent, when and what. So Japan has seen a slower uptake of credit cards and online payments. Consumers also have security concerns, questioning how safe their online financial details are, furthermore the transaction fee associated with credit cards or online payments are still too expensive in Japan, because they are relatively new to this market. Whilst there has been rapid implementation in the last 2-3 years. The change in Japanese mind-sets toward electronic payments will eventually shift but until they do, fintech software/Apps and the like will continue to develop slowly. Open banking (which refers to increased financial services/e-payments being offered by banks to consumers) will need to play its part to increase consumer confidence and uptake, but likewise fintech companies like MoneyTree can do their part to develop systems that close gaps in the banking system and make a consumer’s life easier.
MoneyTree Co-Founder, Paul Chapman said one solution would be if banks continued to open up more through greater deregulation, this would foster more innovation and stimulate growth in Japan. It would also ensure Japan keeps pace with the rest of the world. Who knows, maybe Japan may start to lead in this area one day with banks having the advantage of a big customer base, allowing Japan to play an increasing role as an investment hub in Asia, a role still very much dominated by Hong Kong and Singapore.