London Seeks to Capitalize on Fertile Japanese Fintech Market

England Courts Japan

According to Accenture and Partnership Fund for New York City, the United States’ global investments in fintech ventures tripled from $4.05bn in 2013 to $12.21bn in 2014, and is on target continue its upward trajectory. Now, the trend is catching fire with our neighbors across the pond.

In the span of about five years, venture capital investment in London’s fintech sector has exploded. Expanding from approximately £24 million ($37 million) during the entirety of 2010 to a staggering £312 million ($474 million) through the first half of 2015 alone, it’s clear that the capital city represents one of the world’s cornerstones in finance technology. Now, London mayor Boris Johnson is seeking to engage in strategic partnerships in order to facilitate the expansion of some of the UK’s most promising fintech startups into Japan’s thriving economy.

Not surprisingly, Mayor Johnson prioritized financial technology during his recent trade visit to Japan—the Asian goliath has invested over $180 billion in 19 different UK startups over the last five years alone. As one example, the e-commerce company Rakuten recently engaged in an investment of some $18 million into Currency Cloud, a firm based in London developing API software to make end-to-end international payments more efficient.

More recently, major fintech players such as WorldRemit have started on their own expansion into Japan. WorldRemit allows low-fee money transfers between countries, a trade which represents a sizeable portion of the global $580 billion market for remittance services. They have also taken the approach of establishing local offices in Japan with a dedicated director in order to maximize what is seen as an extremely fruitful opportunity.

Adding to the rush for fintech expansion in Japan is the approach of the 2020 Summer Olympics, which will be hosted at the National Olympic Stadium in Tokyo. The demand to improve and evolve the country’s cashless payment infrastructure already exists but it has been accelerated by the massive demand which these sporting events are expected to create.

Both megabanks and the Japanese Financial Services Agency have begun discussions to advance finance technology while also relaxing legislation in order to meet challenges in a number of key areas including:

  • Personal finance (such as budget management and advisory services)
  • Lending and funding (including crowdfunding and other mass contribution platforms)
  • Payment transfers (specifically credit card and smartphone payments)
  • Overall improved focus on customer touchpoint and security tools

Japan’s financial market is both sizeable and unique, containing the second-largest volume of personal assets among all OECD (Organisation for Economic Co-operation and Development) nations. The country’s $16.2 trillion in total personal assets represents double that of third-place Britain ($7.5 trillion) and ranks behind only the United States ($65 trillion) worldwide.

The United Kingdom and London in particular are eager to gain a foothold in this burgeoning marketplace. While preparation for the 2020 games is in process, the fintech race is also well underway in Japan.

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