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Fintech World Tour: Japan

Publish date: 08 April 2020

Makoto Shibata, head of FINOLAB in Tokyo, spoke with Efma’s Boris Plantier about the growing Fintech scene in Japan.

What is FINOLAB?

The Fintech Center of Tokyo, FINOLAB is a membership community and an office space located in the heart of international financial district in Tokyo to promote open innovation and FinTech ecosystem in Tokyo. Launched in Feb. 2016 by Mitsubishi Estate and Dentsu Group as the first FinTech Center in Japan. It consists of 56 Startup Members and 17 Corporate Members (As of Mar. 2020).

As the community grew significantly, an independent legal entity, FINOLAB Inc. was established in July 2019 in order to operate FINOLAB community.

How do you support Tokyo’s fintech ecosystem?

By connecting different stakeholders, such as startups, financial institutions, regulators, investors, etc., FINOLAB has been a main driving force in Tokyo to create and expand the FinTech ecosystem. Being the first FinTech center in Japan, FINOLAB has close working relationships with all the stakeholders.

How many fintech startups are there in Tokyo?

FinTech Association of Japan has 132 startup members as of Feb. 2020 and we estimate the total number of FinTech startups to be above 500.

(Note: 70-80% of FinTechs in Japan are in Tokyo – so it would be safe to explain cases in Japan as cases in Tokyo.)

How much money is invested in Tokyo fintech startups?

In the year 2018, the total amount of FinTech venture investment in Japan was US$542 Million, according to Accenture. This is less then 1% of global figure, US$55,334 Million.

How do you see the future of fintech startups in Tokyo in the next five years?

We expect the growth of FinTech startups in Japan to continue in the next five years. Yano Research Institute is estimating the sales figure of FinTech startups in Japan to grow 8 fold in five years.

What are the main challenges in terms of bank and fintech collaboration in Japan?

Difference in decision making speed. It is common for a large financial institution to take some time to make decision on a business plan or a development project to start, with various internal divisions involved and with multiple layers of organization. Startups can make decisions quickly, but their resources are limited. So they often need the resources  of a large financial institution but then suffer from the subsequent slow speed of decision making.

Can you tell me about the innovation awards you recently organized?

Japan Financial Innovation Award (JFIA) 2020 is inaugurated this year to promote innovative initiatives in financial areas by adopting information technology, to share best practices in the industry, and expects to further expand open innovation beyond corporate groups and business sectors. JFIA2020 has three categories, including Startup, Financial Institution, and Collaboration. The selection was made in the following process.

1. FINOLAB staff members selected about 300 FinTech related initiatives from the press releases during the year 2019.

2. They went on to provide a short list of 10 to 12 initiatives for 3 categories, including startup, financial institution, and collaboration.

3. FINOVATORS (Non-profit organization, with a group of pro-bono experts(Layer, Investor, Consultant, Analyst, Engineer, Entrepreneur, Banker, Public Sector Specialist, etc.)for supporting startups.) evaluated to identify 5 initiatives for each category to be announced as category winners.

4. Finally, the final evaluation was made by FINOVATORS to select Grand Prix and Category Excellence.

What’s coming next for Finolab?
Preparing to set up an investment fund to support early stage startups. Since fund raising is one of the main challenges for many startups, FINOLAB would be able to expand its supporting role by adding investment capability.

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