FinTech is growing in Japan, but, unlike the rest of Asia, it’s doing so at a much slower pace. With the Asian market tapping into the industry, Japan is establishing itself as a late adopter, falling significantly behind.
According to a report from Brink News, in 2014 Japanese FinTech investments amounted to only 0.4 percent; however, while that figure doubled in 2015, the total amount was just $142 million.
And yet, while FinTech is certainly growing in the country, it appears the reason it hasn’t taken off so quickly is due to a strong bank-branch culture.
The Data Market has found that the number of commercial bank branches per 1,000 square kilometres in Japan in 2013 was 103. This is significantly higher than those found in the rest of Asia.
Compared this to countries such as India, China or Indonesia – which is in talks with South Korea to help boost the FinTech sector in the two countries – where a large proportion of the population is underbanked, but has seen significant movement toward FinTech.
Small Steps toward FinTech
However, while a traditional bank-centric approach still takes the lead for many Japanese consumers and businesses, small steps are being taken toward adopting a FinTech approach.
Earlier this month, the Bank of Japan, the country’s central bank, launched a blockchain test drive to gather more insight into how the technology works. Governor Haruhiko Kuroda is reported as saying that the new technology could bring significant change and impact to the financial industry.
Despite what may seem a slow start, it appears that the Bank of Japan is attempting to embrace the blockchain.
The deputy governor, Hiroshi Nakaso, has stated that there is no plan to issue digital currencies as a substitute for banknotes anytime soon. Yet, he added that the bank is keen to understand more about blockchain technology and how it can be used for financial activities.
Of course one of the issues that may factor in a slow FinTech adoption rate in Japan is down to the hacking at the now defunct Tokyo-based Mt. Gox.
Founded in 2010 and run by Mark Karpeles, in 2014 it was reported that around 850,000 bitcoins belonging to customers and the company went missing. It is believed that the missing bitcoin were stolen over time from the Mt. Gox hot wallet from 2011.
Naturally, with such bad experience in the past with people’s money going missing, and a large portion of it still unaccounted for, it’s not surprising that Japan is such a bank-centric country.
However, changes are being made and while they are taking place they are doing so at a cautionary pace.
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