Japan’s Banks Opening Up to New Tech
Japan’s banking sector remains “deeply traditional” and was until very recently heavily regulated, which meant it has failed to evolve and take advantage of the technical revolution that has swept through other sectors in Japan
And that, believes Michael Kent, is a huge opportunity for British firms that lead the world in fintech, the term for advanced technology in the finance space.
“Deregulation has brought some small changes, but it’s still a very traditional model”, the founder and CEO of Azimo said. “They have finally realised, however, that everything is new today because of smartphone penetration. And that means they are incredibly interested in talking to us”.[memb_has_membership memberships=REGISTERED-MEMBER]
Only set up in 2012, Azimo is a digital money transfer company that has changed the way in which people move their money around.
Available in 80 currencies in more than 200 countries and regions, Azimo is designed to primarily assist migrants to cheaply, safely and conveniently send money abroad, usually to assist their families in their own countries.
Azimo users can shift their funds via computer or mobile phone, drastically simplifying the chain and cutting out expensive high-street banks and retail transfer companies.
“The reaction we have had in Japan has been very positive and among all the banks that we have been speaking to, the sense I get is that they realise they have to engage with companies like us,” Kent said.
And with 2.5 million foreign residents of Japan, many of whom are transferring money elsewhere in the world at an average cost of 14 percent of the total transaction – which is double the global average – Kent says the potential in this country is “huge”.
UKTI Fintech Trade Mission Introduces British Firms to Japan
Kent was visiting Japan in early December with a fintech trade mission organised by UK Trade & Industry. The first mission solely focused on introducing British fintech firms to the Japanese market, the five-day event was designed to either introduce or elevate the profile of 11 companies, ranging from specialists in payment processing to compliance, data analytics and automated teller machine software.
Chris Heffer, director of the Trade and Investment division at the British Embassy in Tokyo, emphasised the UK’s dominant position in the fintech sector and the opportunities that exist for collaboration between British and Japanese companies.
“This year, one of the British government’s themes is ‘Innovation is Great’ and the UK is well-known as a major hub for fintech”, he said in a seminar as part of the trade mission.
Deal volumes in fintech investment in the UK and Ireland have been growing at a remarkable 74 percent a year since 2008, well ahead of the global average of 27 percent, while 1.1 million people work in the financial services sector across the UK.
Britain’s strengths in fintech are due in large part to the presence of a large and technologically sophisticated customer base, London’s position as a world-leading centre for financial services, the ready availability of business capital, a supportive regulatory regime, excellent financial services infrastructure and London’s position as a global trading hub.
Those factors have come together to make companies like Miura Systems a market leader and encourage CEO Ian Rutland to seek new opportunities in Japan.
Japan Getting Up to Speed with Financial Technology
“We believe there is a ‘perfect storm’ of things happening here at the moment”, Rutland said, pointing to new measures introduced in the European Union and the United States to make fraud involving the abuse of magnetic strips on banking cards more difficult as well as the Japanese banking system’s need to get up to international speed for transactions ahead of the Rugby World Cup arriving in 2019 and Tokyo hosting the Olympic and Paralympic games the following year.
Set up in 2008, Miura Systems delivers secure, innovative payment hardware solutions that have mobility at their core, Rutland said. Since its first mobile point of sale product was launched, that company has gone from strength to strength and reported revenues in excess of $32 million in 2015.
The company is now focusing on the delivery of “SmartPos” solutions that harness the power of tablets and other smart devices to effectively reinvent the point of sale, said Rutland – who added that he was delighted to walk into a sports bar in Tokyo on his first evening in the city and discover the staff using Miura Systems equipment.
“Our devices are attractive to end-users because they operate with the consumer in mind and there is a massive cost preferential over what is already available here”, Rutland said.
“We see Japan as a massive opportunity, as long as we can break down the barriers of existing service providers”, he added.
Miura has already partnered with Rakuten and a number of other companies to market its devices in Japan, primarily because a Japanese company prefers to work with a company that it knows and probably already has a business relationship with, Rutland said. A local partner is also important due to the language barrier as well as the time difference between Japan and London.
“We may be a small company, but we are providing something that they do not have in this country – which is always held up as being the most technologically advanced in the world”, Rutland said. “Yet today, Japan accounts for 20 percent of our sales and is our largest single market. That makes me really proud”.[else_memb_has_membership] [/memb_has_membership]
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