This article is written in both English and Japanese.
Japan’s financial services industry is faced with persistent and structural challenges, not least negative interest rates. At a recent financial regulation summit, we considered whether innovation is able to deliver a fintech boost for Japanese banking.
- An ageing population, financial inclusion, technological innovation, and market fragmentation are seen as the most pressing issues for Japanese banking.
- The Refinitiv Japan Risk Management Technology Summit discussed the progress of artificial intelligence and big data and how they could serve as a fintech boost for Japanese banking.
- Unrealistic expectations about the impact of technology seem to have eased, allowing Japanese banking to discuss fintech potential with a degree of realism.
When I started writing this blog from my home near the sea, Super Typhoon Hagibis was approaching in one of the largest storms ever to hit the Tokyo area. The scene reminded me of the painting ‘The Storm on the Sea of Galilee’ by Rembrandt van Rijn.
Marcelo Hiratsuka from our team at Refinitiv Japan projected this painting on the big screens during the opening remarks for the afternoon session at our financial regulation summit held in Tokyo on 3 October, referring to a similar environment surrounding the current financial sector.
This was a wake-up call for the audience.
Resembling the masterpiece, fleets of financial institutions were thrown into a stormy sea by the global financial crisis. However, the efforts of many over the past decade helped to finalize the Basel III framework, preparing us to withstand tail risks, as in a sudden storm.
Japanese banking challenges
We have hosted the financial regulation summit in Japan for the past five years.
Following the financial crisis, we invited experts from the public and private sectors to discuss impacts, measurements and issues surrounding a new regulatory framework.
#RefinitivSummit comes to Tokyo today!
We are at Japan Risk Management Technology #RefinitivSummit, ready to discuss the most pressing issues in the financial sector in Japan, including the vital role data strategies play in risk management. Stay tuned today for live updates. pic.twitter.com/z0QTblUbod— Refinitiv (@Refinitiv) October 3, 2019
The summit has been recognized as one of the most regarded risk management conferences in Japan. This year, we changed the name of the event to the ‘Japan Risk Management Technology Summit’ as financial institutions, especially those that took tail risk countermeasures, now face persistent and structural issues.
There are four key issues fueling these challenges:
- Global trends of continuous ultra-low interest rates and yield curve flattening.
- Other industries leveraging technology and data to penetrate into the financial sector.
- Conflict between globalization and protectionism in politics and commerce spreading to the financial sector.
- Finance is expected to play a major role in solving social issues in response to ageing and environmental degradation, as well as climate change, money laundering and counter terrorist financing.
Surrounded by these new challenges, Japan hosted and chaired the G20 Finance Ministers and Central Bank Governors in Fukuoka in June this year.
Japan’s Financial Services Agency (FSA) identified an ageing population, financial inclusion, technological innovation, and market fragmentation as important issues for the future.
For financial institutions with international exposure, the disruption of markets by protectionist regulations squeezes profits due to the diversification of optimal allocation of capital at different scales and the cost of responding to regulations that differ from one jurisdiction to another.
#RefinitivSummit in Tokyo, Japan, concluded successfully with more than 200 professionals and experts sharing experiences and insights on leveraging #data and #technology. Hear about Marcelo Hiratsuka, Head of Market Development, Japan, elaborates on @RefinitivJP objectives. pic.twitter.com/4v973ObDHS
— Refinitiv (@Refinitiv) October 4, 2019
Managing the technology hype
In 2015, during his keynote speech at the Pan-Asian Regulatory Summit held in Hong Kong by Refinitiv (then Thomson Reuters), Mr. Nobuchika Mori, the then Commissioner of the FSA, drew international attention by pointing out the unintended consequences of over-regulation.
Regarding the response to market fragmentation, an FSA official at this year’s Japan Summit laid out the regulator’s efforts during her speech, and I hope that FSA will demonstrate its leadership in the international community again.
As a way to break through this harsh financial environment, there is an increasing expectation for innovation through fintech in Japan to create new revenue opportunities, but at present, cost reduction through operational efficiency is probably the most effective method.
Based on the Gartner Hype Cycle, which attempts to discern the technological hype from what’s commercially viable, we could argue that fintech in Japan is on the ‘slope of enlightenment’.
It’s not wrong to say that excessive excitement and unrealistic expectations have disappeared, and we are at the stage where we can discuss things with ease.
Fintech opportunities in Japanese banking
At this year’s summit, we had practical discussions on how to use artificial intelligence and big data based on past experiences.
As a moderator on a panel discussion on the Opportunities and Pitfalls in the New Era of Financial Data and Technology, I asked panelists how to enhance possibilities to open the door to the future — whether advancing into other fields through holding companies or deepening finance.
They answered that profiting from the financial business itself would be very difficult when there is virtually no interest rate, with scant differences between long-term and short-term interest rates. Then the answer would be expanding the scope of business.
Establishing trading firms by regional banks — a topic that has frequently been discussed these days — is a step in that direction.
The day before the recent strong typhoon hit Tokyo, I visited a local specialties fair held at a department store in Ginza, Tokyo. An acquaintance, who is a regional bank employee, invited me.
I wondered where the financial business would go, watching the acquaintance selling regional products in a very natural way while his handling of bank notes for change reminded me that he was a bank employee.
金融への期待と現実、そして変貌
このブログを書いていたのは、まさに史上最大級と形容された台風19号が迫りくる時だった。海に近い我が家で、不気味な風の音を聞いていると、レンブラントの絵画「ガラリアの海の嵐」が思い出された。
リフィニティブ・ジャパンの平塚マルセロは、10月3日に都内で開催されたリスク・サミットにおける午後の部の冒頭スピーチで、この絵を大画面に映し出すことで、現在の金融を取り巻く環境を暗示し、昼食直後の聴衆の目を覚まさせた。グローバル金融危機により、金融機関の護送船団は、嵐の海に投げ出されたと言えよう。しかし、その後の10年の関係者の努力で、バーゼルIIIも最終化し、突然の大嵐のようなテールリスクへの備えはできたように思える。
その歩みの中で、当社は日本において過去5年にわたって「金融規制ジャパンサミット」を主催してきた。金融危機後の新たな国際金融規制の枠組みについて、影響、対応や課題について官民から専門家を招き議論を深め、日本における代表的なリスクマネジメント・コンファレンスとしてすっかり定着。しかし、6回目の今回、あえて名称を「ジャパン・リスク・マネジメント・テクノロジー・サミット」に変更した。その理由は何か。テールリスク対策に道筋をつけた金融機関は、今度はむしろ、恒常的かつ構造的な問題への対応を迫られているからである。
そうした新たな問題として、1）恒常的な超低金利とイールドカーブのフラット化の世界的な広がり、2）テクノロジーとデータを武器にした他業態からの金融への参入、3）グローバリズム対保護主義という政治、貿易上の対立軸が金融にまで波及しそうな情勢、4）高齢化や環境、気候変動への対応、マネロン、テロ資金への対策といった社会的な問題の解決に金融が大きな役割を果たすことを期待されている状況－の4点が指摘できよう。こうした新たな課題が山積する中、今年、日本はG20の議長国を務め、6月に福岡で開かれたG20財務大臣・中央銀行総裁会議で、金融庁は、高齢化と金融包摂、技術革新、市場の分断化を今後の重要な課題として俎上に載せた。
保護主義的な規制による市場の分断化は、国際的に事業を展開する金融機関にとっては、資本の最適配分と異なる尺度での分散や、進出先毎に異なる規制への対応コストで、収益を圧迫する。2015年に当社が香港で開催した汎アジア金融規制サミットの基調講演で、当時の金融庁長官だった森信親氏は、過剰規制がもたらす想定外の結果を指摘して国際的に注目を集めた。グローバル金融危機からの教訓を学ぶ過程で、規制強化一辺倒になりがちな流れに一石を投じ、その後のバランスの取れた議論に道を開いた。市場分断化への対応についても、今回のサミットにおける金融庁講演で取り組みの説明があったが、再び国際的指導力を発揮されることを期待したい。
この厳しい金融環境を打破するための方途として、テクノロジーによるイノベーションに期待が高まるが、現状では業務効率化によるコスト削減がその効果の大半ではないか。新たなビジネス創出で、トップラインに貢献するのは、これからの課題と言えそうだ。日本のフィンテックはテクノロジー・ライフサイクルを示すガートナーのハイプ・サイクルになぞらえれば、黎明、流行期を越え、幻滅期から回復期に入りつつあると言ったら多くの反論を受けるかもしれない。しかし、過度の興奮と非現実的な期待が消え、冷静な議論ができる段階にきていることは間違いなさそうだ。今回のサミットでも、AI（人工知能）やビッグデータの活用について、これまでの経験を踏まえた実践的で示唆に富む議論が展開された。
金融の明日を開く可能性は、持ち株会社を通じた他分野への進出か、金融を深めることにあるのかという筆者の問いかけに、対談相手は、金利が長短金利差も含めて、ほぼない状況では、金融で稼ぐのは極めて厳しいと述べた。ならば事業範囲の拡大となる。最近話題の地域商社の設立は、まさにその方向だ。台風接近の前日、知り合いの地銀行員から東京・銀座にあるデパートで物産展をやるという案内を受けて立ち寄った。お釣りのお札の扱いに銀行員であることを伺わせるものの、如才なく地元物産を売る姿を見て、今後の金融のあり方に再び思いを馳せた。
