Tokyo FinTech Digest #6
Greetings from Tokyo!
Another interesting week in Japan, the highlight being new Bank of Japan measures to reward with a kind of “bonus interest rate” those regional banks that commit to reducing their overhead cost, restructure, and possibly merge. We take this as the latest shot in a battle over increasing concerns about the sustainability of the sector, after 20+ years of zero interest rate policy, an overall declining population in Japan going hand-in-hand with further urbanization, and associated diminishing regional economic activity.
Rather than entering straight into a critique of the BOJ proposal, which (without taking the punchline away) likely is too little, too late, we intended to baseline our understanding and dissect prior research in a series of articles. We started by explaining the customary differentiation between “City Banks, Regional Banks and ‘Other’ Banks”, before surfacing a Financial Services Agency study from 2018 that boldly stated that about half of Japan’s prefectures cannot sustain their own regional bank. More to come this week.
Just two days prior, we had the opportunity to interview Nicholas Smith, Japan Strategist at CLSA, and top-ranked in his field by Asiamoney for eight years running, since 2013. Nick commented that “the banking business has been a license to burn money for decades,” and with regards to possible sector consolidation, “you can tie two bricks together, but it will not make them float.” The interview is available as a podcast and transcript.
eXponential Finance Podcast
This past week, in addition to the discussion on Japan’s equity markets mentioned above, we had the opportunity to discuss the Comprehensive Economic Partnership Agreement (CEPA), the free trade agreement between the UK and Japan, with Darren Goff, Head of Investments — Japan at the Department for International Trade. In the process, we touched upon traditional barriers to entry for startups and foreign companies in general, as well as why there is reason for optimism that CEPA will help make things easier.
We also held our 100th Meetup since establishing Tokyo FinTech in June 2017. Christopher Scheidel, long a supporter of Tokyo FinTech, and previously the CIO of MassMutual’s Japan subsidiary, shared his story of the organizational transformation of the technology department, the development & implementation of an easy-to-communicate IT Strategy through Simon Sinek’s “Starting with Why” framework. The presentation is available as an edited podcast (without Q&A), as well as an unedited YouTube recording (including Q&A).
Events
Moving right along into the next century, coming up over the next two weeks are:
- If you are missing meeting new people as much as we do, please join us for a round of Virtual Speed Networking on the Run The World platform on Tuesday, November 17
- On Wednesday, November 25, we are keen to hear the latest from Lman Chu, Co-Founder & CEO at BiiLabs in Taiwan, an early adopter of Directed Acyclic Graph (DAG) technology for the Internet-of-Things (IoT), who will discuss their payments infrastructure, among other things
That is it from me this week. If you like this bulletin, please forward it to a friend (or two).
Please stay healthy and in good spirits!
Best,
Norbert