The Japanese government is looking for a way to change the regulation covering all banking sectors in the country to bring them all under one roof. The Financial Services Agency wants transparency and equal competition between traditional financial institutions and fintech. The $10 trillion banking industry in Japan is dominated by banks who for a long time have had a relative monopoly over the market. However, given recent developments in fintech and cryptocurrency, the finance regulators want to breathe new life into the industry.
Previously, there were rules covering the different financial services, such as for corporate banking and retail banking and even asset management as separate entities – as is the case in most countries. Now, there could potentially be just one set of rules for all players to adhere to. The concern for traditional banks is that they will lose their monopoly over deposits, as fintechs will now be able to accept deposits. The plus side is that traditional banks will then be free to engage in modern alternatives and get into different services.
Financial Services Minister Taro Aso said the change in the market has made regulations more burdensome. It would be easier therefore, to make regulations for services instead of service providers. There would no longer be rules for banks or insurance companies, rather there will be rules covering deposits and savings for example, so that any company offering that service would adhere to it. This would encourage companies to do more, instead of less, as some fear. “We can strengthen the competitiveness of finance in Japan so that companies are free to select from diverse business models,” Aso said. “This will encourage imagination, creativity and ingenuity from financial institutions and new entrants.”