Global Opportunities

Regulatory Technology in Japan: Unlocking the hidden value of compliance

In Japan, Regulatory Technology (RegTech) is seen as a key solution to address systemic issues of the financial industry. Switzerland is gaining recognition in the fields of cryptography, blockchain and other distributed ledger technologies. Swiss tech companies can leverage this reputation to provide solutions.

A businessman uses a smartphone to access various regulation-oriented services.
A businessman uses a smartphone to access various regulation-oriented services.

Backed by the banking and financial industry, the government of Japan encourages the implementation of RegTech services and products. With the 2020 Tokyo Olympics on the horizon, the aim is to create the required environment for the adoption of FinTech services, boost business efficiency and lower compliance risk exposure. Another goal is to increase bureaucratic efficiency and improve government services to taxpayers as well as businesses through the development of streamlined e-Government solutions that include RegTech.

Financial institutions look to RegTech to address systemic hurdles holding back the Japanese economy and generating high costs (e.g. extremely high level of cash transactions [60%] that block up to 10 trillion JPY of value; lack of digitization and digitization in both private and public sectors).

These come in addition to usual compliance-related costs, such as enforcement of KYC, AML and data privacy rules. The incorporation of AI, Big Data analysis, or blockchain is a priority for the banking industry, given that 3-4 billion USD are spent each year by the three Japanese mega banks alone on compliance. It is also the case for government services handling large volumes of sensitive data, such as pension and health insurance. Solutions launched overseas are studied (e.g. cashless society in Sweden; EasyGov platform in Switzerland), and a start-up ecosystem bringing together domestic and foreign tech start-ups, major companies, investors, researchers and the public sector is growing.

Open innovation is the only way for Japanese businesses and government to integrate the required technologies. 91% of financial companies consider collaboration with external tech providers within the next 3-5 years, in particular for adopting blockchain technology. Priorities include: cyber security to guarantee customer trust in the banks during financial operations; compliance and other regulations; digital identity authentication; AML and KYC; digital currency/virtual currency.

Various opportunities for Swiss SMEs 

With its traditionally strong financial industry, Switzerland is gaining international recognition as a global center of cryptography, blockchain and other distributed ledger technologies and businesses. This reputation can be leveraged in Japan by Swiss tech companies by offering products and services such as:

  • AI based solutions for data extraction and data quality check
  • AI tools to assess compliance and risk exposure
  • Predictive analytics
  • Tools for sharing sensitive information on KYC and AML
  • Digitization tools
  • Tools simplifying ID check
  • Improvement of cyber security and tools protecting user data
  • Platforms allowing individual and business taxpayers to provide and/or request information online
  • Platforms for online procurement bidding
  • Cloud services

Would you like to learn more?

Swiss Business Hub Japan and its Fintech/Regtech experts will gladly assist you in opening doors. Sign up for an individual and closed meeting with a SBH Japan trade officer during the next country consultation days or contact Jacqueline Tschumi, our consultant for Japan, to arrange a free consultation meeting. Contact her now

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