Japan Jumps Into FinTech Accelerator Ring

In an effort to catch up to other nations that have been relatively more proactive in investing in the FinTech arena, Reuters reported that Japan is freeing up regulations tied to capital that could kickstart investment in the sector.

The greenfield is a lucrative one, as the Japanese economy has roughly $9 trillion in cash that is kept in individuals’ bank accounts alone.

But there are some hurdles to clear. Interest rates are still at “rock bottom,” as the newswire noted, and there is also rather tepid demand in place for financial services, tied to a “risk-averse population” that is still used to using cash, even over credit cards. Consider some stats: While FinTech firms grabbed billions of dollars in investments in the United States, China and India last year, Japanese firms saw investments of a quite paltry $44 million in the first nine months of last year.

Looking ahead, the nation’s financial industry regulator has been pushing to relax rules that have been in place restricting investment in financial firms, where banks will be allowed to buy up as much as 100 percent of non-finance-related enterprises, paving the way for FinTech partnerships and delving into, of course, areas such as blockchain. As the law stands now, traditional investment firms have been restricted to owning only between 5 and 15 percent of FinTech enterprises.

And, in addition, there is a new regulatory framework shaping up for the regulation of virtual currency exchanges, and that is up for a vote by May of this year.

Among the financial services firms that have expressed interest in diving into these new investment waters: Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group.