Japan takes centre stage in the sporting community in 2019 and in 2020. Just earlier this month, it became the first Asian country to host the Rugby World Cup. While it is not one of the popular sports in the country, Rugby Mania has gripped Japan.
As an avid All Blacks fan, I have been keeping up with the games as well, thanks to them being played in my time zone. The stadia are full, television viewership is creating new records and the host nation is delivering engagement figures unmatched in previous world cups. In many ways, it’s a prelude to what we can expect in the 2020 Summer Olympics. The last time Japan hosted the summer games – Tokyo 1964. It wowed visitors with its Shinkansen, the high-speed bullet train that has since become a byword for efficient transport.
Japan is eager to show the world that it has regained its touch for technology innovation. We are likely to see in action several of the latest technologies in real action. It includes driverless cars, robot volunteers, facial recognition software and ultra-high-definition TV for what may be the world’s first drone-based, 5G-enabled live streaming and viewing system capable of showing live events in 360-degree 8K virtual reality (VR) video. Bank of Japan expects the Summer Olympics to boost the economy by as much as US$249 billion.
Role of Financial Services Industry in Olympics
The Japanese government is also looking at the financial services industry to play its part and showcase its progress leading up to the Olympics. Cash is still a big part of the local economy (it’s the world’s most cash loving developed economy) and card payments make up just 20 per cent of the total transactions. Digital payments have therefore emerged as an important area of focus. The government is incentivizing both sellers and consumers to use digital payments. This will help the banks with poor profitability as a result of the less than ideal interest rate environment.
The answer lies in shutting down branches and consolidating ATM’s. There are about 200,000 ATM’s in the country and that costs the industry an estimated US$18 billion a year. This could be a huge motivation to push the industry to digital. Prime Minister Shinzo Abe’s administration has taken the lead and drafted a bill to make more government services available online. With a median age of 46 years, Japan is of the world’s most aged countries. But that is not stopping the government and financial institutions alike from driving the transformation of the FinServ industry.
There are three major initiatives underway to drive such a transformation. These are centred mostly around making the Olympics a pleasant and inclusive financial experience for locals and visitors alike.
3 Major Initiatives:
1. The need for Hanko (personal seal owned by every Japanese) getting eased.
Mitsubishi UFJ Financial Group (MUFG) and Resona, have also started allowing customers to open accounts without “Hanko”.
- As many as 100 of MUFG’s 500-plus domestic outlets will convert to the new format by 2024
- Resona Holdings last year started allowing customers to open accounts without Hanko at about 600 branches
2. QR code-based transactions:
- Mizuho, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group agreed to unify QR code specifications. They want to provide greater convenience to merchants and customer to speed up the adoption of cashless payments.
- Alipay announced to collaborate with several local Japanese partners to build a cashless environment for Tokyo Olympic Games in 2020. This will allow tourists from China and other Asian countries to be familiar with Alipay. Visitors are familiar with easy payment methods and the local merchants in Japan will be benefited from these opportunities.
The most exciting development however is the possible launch of a cryptocurrency as the Games’ official currency. The adoption of cryptocurrency for the 2020 Olympic game is based on the idea that the influx of people to Japan and their different currencies might put pressure on the Yen. Many parallel initiatives are underway.
- MUFG plans to release its own coin by the end of 2019. The MUFG coin will have parity with the Japanese yen. It will be rolled out to employees of the financial services group first. It will enable standard transactions, such as shopping or the transfer of money between individuals. Users will have to create wallets in order to use the cryptocurrency, and MUFG will handle the processing of the transactions internally. It conducted tests to roll out the coin in 2016 and tied up with cryptocurrency exchange GDAX, run by Coinbase.
- Mizuho Financial Group is another large holding company that has also been experimenting with blockchain technology. It has been a part of a project known as “J-Coin” by the end of 2019. It is estimated that close to 60+institutions will adopt J-Money. Several other banks are also investing heavily in Blockchain. MUFG is joining forces with various partners to build a blockchain-based consumer payment network for the Olympics.
Japan has always inspired the world through its culture, meticulous attention to detail, its food and also its cutting edge technology. I am so looking forward to the Olympics to see what is in store. For whatever they do, it is likely to leave a lasting impression just as the Shinkansen. I look forward to the rising digital ambitions in the Land of the Rising Sun! Let the Games begin!