Banks and other players in Japan are increasingly launching initiatives to catch up in the fintech race, with rivals in the USA and Europe, as well as tech giants like Apple and Google, especially in the area of payment services – predominantly virtual currencies. These are defined by the Japanese government as having asset values that can be used for settlement. Last year in May, a respective law on regulations for bitcoin and other virtual currencies was revised in order to prevent their criminal use; under the law, exchanges handling virtual currencies must be registered with financial authorities. Also, the government is generally encouraging partnerships between financial institutions and fintech startups.
To name an example, Japan’s leading banks Mizuho and SMBC, as well as Dai-ichi Life Insurance (Mitsubishi UFJ is a stakeholder) have recently invested roughly 200 million yen in Japan’s largest bitcoin exchange, BitFlyer. The banks could tap on BitFlyer’s know-how to provide more secure and cheaper international wire transfers, as well as around the clock wiring – as compared to the current confinement to ATM hours.
Aside from their investment in BitFlyer, Mitsubishi UFJ also tied up with bitcoin exchange operator Coinbase and will issue its own virtual currency called «MUFG coins» by March 2018, providing money transfer services at lower fees, eventually aimed at young customers. The coins allow for example to split bills at restaurants quickly by using bank accounts on the smartphone («wallets») and quick money transfers. Other than virtual currencies, Mitsubishi UFJ is also using Tokyo startup Xeondata Lab’s technology to analyze their vast transaction data in order to ultimately foster more business with small and midsize enterprises. Mizuho, on the other hand, is teaming up SoftBank Group, applying AI to screen personal loan applications. Interest in fintech is, however, not confined to the banking sector and insurance companies such as Dai-ichi Life or Nippon Life Insurance are eyeing investments in and tie-ups with fintech startups.