Japan pushes fintech innovation with Singapore collaboration
SINGAPORE FinTech Association (SFA) has inked a memorandum of understanding (MOU) with the Fintech Association of Japan (FAJ), in efforts to boost collaboration and innovation towards the fintech industry in Japan.
The two associations will be working together in joint projects supporting fintech development. Moreover, the partnership will promote Singapore as a destination for Japanese businesses in Asia.
“Both Japan and Singapore share similar opportunities in terms of attractive market potential, forward-thinking regulators, and well-regarded industry associations,” SFA wrote in a statement.
This is a major step for Japan, as its stringent laws have long been a hindrance towards the country’s development and innovation, mainly caused by its lack of flexibility in allowing financial institutions to engage with fintech startups.
According to the Financial Times (FT), the ease in banking regulations started in 2016, as financial institutions began pushing for deregulation. FT reported that government and bank officials were “driven by a sense of crisis that Japan was falling behind the US and UK in capturing the growth of online financial services, such as online payments, lending, and digital currencies.”
Beyond regulations, the culture in Japan plays a huge role in the comparatively slow development in the fintech space. Working for major corporations is still favored over starting one’s own company.
While mobile payments existed as a service provided by telco companies as early as 2004, innovations have since stagnated, as Japan seems to have gotten comfortable with existing systems.
Along with the MOU, a joint statement between SFA and FAJ noted that the Financial Services Agency of Japan has updated its legislation to allow collaboration between established banks and non-bank fintech companies.
SFA has partnered with many international organizations and academic institutions from across the world including thosed based in Abu Dhabi, Denmark, Hong Kong, Luxembourg, New Zealand, and Switzerland.
Singapore is a prime location for fintech development. As highlighted in KPMG’s Pulse of Fintech report, fintech funding in Singapore reached US$229.10 million in 2017. The report also noted the Monetary Authority of Singapore’s (MAS) efforts in collaborating with financial institutions for developing blockchain proof-of-concepts (PoC).
“Given the fragmented markets, fintech companies are not taking a disruptive approach to these services, focusing instead on building partnerships with telcos and other local players in order to better engage with potential customers,” said Chia Tek Yew, Head of Financial Services Advisory, KPMG in Singapore.
For Japan, this partnership spells good news for finally getting the fintech scene in the country up to speed, with the help of Singapore’s experience as a major financial and fintech hub.
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