Tokyo has a reputation for not only being the wealthiest city in the world, but also having one of the world’s largest metropolitan economies. But is that enough to gain it FinTech glory? In this week’s Tech Center Roundup, we take a look at whether money can buy global tech hub success.
In this week’s edition of PYMNTS’ Weekly Tech Center Roundup, we explore the richness of Tokyo, Japan, and its potential to be a tech hub powerhouse.
Before we jump into the post, here are a few quick facts about Tokyo and its tech scene:
Tokyo is well-known for its strong economy and significant presence in the financial world. Japan’s ranking as the world’s second largest economy has made Tokyo a hotspot for many global banking and financial firms looking to set up regional headquarters.
Though it’s earned a strong reputation for its finance industry, the city is still working to make a name for itself as a global tech hub.
“Japan has the talent and funds but lacks the necessary ecosystem to create its own Silicon Valley, so that’s what we’re trying to provide,” Taizo Son, serial entrepreneur and founder of Japanese startup hub Mistletoe, recently told The Wall Street Journal.
Despite the fact that Japan’s tech industry has produced everything from the Walkman to the bullet train, it is now struggling in a space where it was once a dominant player.
But with the government showing initiative to support startups and universities launching incubators and venture funds, the country’s status in the tech center world may begin to change.
Japan’s Financial Services Agency (FSA) announced its own plan to boost the FinTech market by making it easier for companies to collaborate with the financial technology industry. The aim is that a framework will be established that enables IT companies to act as liaisons between banks and consumers.
Through the creation of a new working group, the Financial System Council will look to develop laws and guidelines that will steer an increase in intermediaries that can support mobile-based cash management services to the public.
The move is a significant one for a country that has long been considered a laggard in embracing the FinTech revolution.
But the government’s efforts to ease investment restrictions could be a game-changer.
According to Reuters, the decision could enable the flow of capital on an estimated $9 trillion in cash deposits. However, Japan still has to tackle the strict regulation, easy access to credit, and low demand for financial services that have slowed down the advancement of FinTech innovations across the ecosystem.
“The law changes aren’t a goal, but a first step,” Norio Sato, an FSA senior official, explained to Reuters. “FinTech will have a big impact on financial services.”
The intended changes are expected to help banks to buy stakes in non-finance-related firms, which could open the door to financial institutions working closely with FinTech ventures to develop a host of services, including robo-advising and blockchain.
Japan’s first startup unicorn, eCommerce company Mercari, may be looking for new funding in order to keep up momentum. The firm’s free mobile app recently saw a surge in U.S. downloads and hit No. 3 in the rankings earlier this month, bringing the total number of installs in the U.S. to 12 million.
“We’ve passed a tipping point and the fire is beginning to spread,” CEO Shintaro Yamada explained. “How do we maintain momentum while keeping an eye on rivals and new markets? These are the things you consider when shifting gears. Additional fundraising may be necessary.”
Bloomberg reported that the Tokyo-based company has raised roughly $84 billion to help its growth in the U.S. market. The mobile app, which helps to connect buyers and sellers, is looking to go head-to-head with tech giants like Amazon and eBay, while also considering an introduction of the service in the U.K.
Another Tokyo-based startup, Liquid, provides a payment system that relies on biometrics rather than mobile payments with smartphones.
The service is backed by the Japanese government, as well as some major finance and technology firms, and is set to roll out its fingerprint-payment system at retailers across both Japan and other major Asian cities.
Even travelers visiting Tokyo will have the ability to test out the service in the city’s Ikebukuro shopping district by registering their fingerprints and payment card information upon checking into their hotels. The ultimate goal is to have the service more readily available by the time the city hosts the Summer Olympics in 2020.
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