Japan’s financial regulator will establish a FinTech hub to provide a framework enabling industry startups to test new innovative financial services.
A report in the Nikkei on Wednesday has revealed that Japan will install a ‘testing hub’ for financial technology startups and companies to trail new services. Established by the Japanese Financial Services Agency (FSA), the hub will help enable developers and regulators to understand hurdles in the way of the FinTech industry’s growth and identify legal concerns that need to be adhered to.
Expected to launch this summer, the FinTech hub is likely to be the ‘precursor’ toward a regulatory sandbox – a testing environment commonly seen with FinTech-forward countries including the likes of Singapore, the United Kingdom and Australia, among others.
Notably, the FSA is also working with the Japanese Bankers Association (JBA) in shaping its FinTech foray. The regulator will play the part as a ‘liaison’ between FinTech firms and banks. The JBA, a working group of all 252 domestic and foreign banks in Japan, is already experimenting with financial technologies with the development of a common blockchain platform to be used by the country’s banks for domestic money transfers.
The soon-to-be-launched hub will include testing of blockchain technologies. Today’s report also adds that tests are expected to last six months to two years, providing valuable ‘insights for commercializing fintech services.”
The marked effort toward commercial FinTech services comes at a time when the Japanese government is pushing its agenda for the growth of digital payments in the country. Japan is playing catch up to the likes of China and Korea, who see over 50% of their populous adopting cashless payments. Japan, in comparison, is a relatively meager 19%.
The remit from the Japanese government sees a FinTech growth strategy that aims to double that adoption rate, to 40%, during the next decade. Retail bitcoin payments are already a reality in Japan. Earlier in April this year, Japanese legislation recognized bitcoin as a legal method of payment akin to prepaid cards or gift certificates. Major retailers are working with bitcoin startups to develop payments solutions, a move that could ultimately see up to 300,000 Japanese stores equipped to accept bitcoin this year.
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