The Japanese government are set to make it easier for the country’s fintech startups to trial new services and technology. Their financial authorities are introducing a pro-innovation sandbox that will offer firms the opportunity to conduct regulator-free trials.
A government agency will review proposals from developers and startup fintech firms. If granted approval, the developers will be given a limited time to run experiments within the sandbox.
The new technology would not be subject to the government’s stringent regulations governing financial services when they are in the sandbox. This will allow them to conduct tests safely, and experiment with different kinds of technologies.
The Japanese banking industry has been quick to embrace new fintech trends like the bitcoin blockchain. Ironically, however, it is some of the country’s biggest financial firms that are taking the lead, rather than smaller fintech disruptors.
Japanese banks show faith in Fintech and digital currencies
Japan’s 3 biggest banks; Mitsubishi UFJ, Mizuho Capital and SMBC Venture Capital are all investors in bitFlyer. bitFlyer is Japan’s largest bitcoin exchange, which has raised $27 million dollars to date. Mitsubishi UFJ began issuing its own digital currency, MUFG Coin, to its employees last month, reports Cryptocoinsnews.
The Japanese government are concerned that newer fintech firms will struggle to gain entry to markets thanks to the size of barriers to entry. For this reason, the Japanese banking authorities want to provide a safer environment in which to incubate new firms.
In its report on the matter, the government said “Waiting for full-fledged deregulation to catch up with the rapid advances in fintech and other areas could leave Japanese companies behind the rest of the world in the race for market share.”
The authorities will also use the sandbox as a way of identifying current regulations that may be detrimental to the development of the fintech industry. They have pledged that any such regulations will be “eliminated entirely”.
The sandbox is one of the first pillars of a new economic growth strategy that will be compiled over the next month. The sandbox could be in place as early as the next fiscal year.
Japan keen to see more innovation’s within mobile baking, blockchain
The Japanese authorities are keen to promote more innovation within mobile banking, using smartphones, and Artificial Intelligence.
One area that the Japanese Bankers Association (JBA) has embraced is the blockchain. The JBA is currently building a platform, which is due to be ready by the end of the fiscal year. The platform will allow large and small banks in Japan to try using the blockchain for money transfers. In so doing, they hope to provide a better service to customers.
Members of the JBA will form coalitions with other banks in order to trial the new services and carry out testing. The JBA have agreed to absorb the costs of the trials.
Using blockchain technology could drastically reduce the time taken to complete certain financial transactions. It could also reduce costs to a tenth or even a twentieth of what they are now, Asia Nikkei suggests.
Both Mitsubishi UFJ Financial Group and Mizuho Financial Group are running tests for sending remittances via the blockchain. The JBA hopes that this new collaboration will enable smaller financial firms to collaborate. In this way, they will benefit from being part of the same ground-breaking tests.