● There is a huge pressure for the Japanese finance sector to adapt to the times, according to fintech observers
● International banks such as HSBC are adopting blockchain technology as well
● Local banks and financial firms are looking into blockchain to reduce transaction time
Mitsubishi UFJ Financial Group and HSBC are reportedly embracing blockchain technology in a bid to remain relevant but it’s not just global banks that are welcoming the disruption. News coming from Tokyo say that the move is specifically aimed for the banks’ fight for dominance against challenger banks and other payments processing fintech firms. Local players such as Resona Holdings already adopted the technology and other financial institutions are expected to followed suit. Fintech observers in Asia say that the adoption will enable cheaper money transfer services as well as make other payment transactions a lot faster.
It is mainly the fierce competition that is driving global and local banks to finally leverage blockchain, according to a report published by Nikkei Asia. In recent times, international money transfer transactions have been dominated by fintechs, threatening the dominance of banks as the main currency movement processors.
The disruption arrives at a time when Asia is experiencing rapid trade growth and tourism. Nikkei says that there are a number of opportunities with blockchain being the faster and more reliable solution.
A total of 12 banks which include Mizuho and HSBC will be replacing their platforms with blockchain. The banks say that they will be able to digitize banking services within a year’s time. According to fintech experts, the change is long overdue.
Blockchain technology can reduce transaction times to 24 hours instead of the usual five to ten days. Conventional processes involve a lot of paperwork, according to HSBC and the finance sector needs to adapt. As far as Tokyo is concerned, that is what its major institutions in the banking sector are doing. Resona Bank, SBI Sumishin Net Bank, and Suruga Bank recently inked a deal with Tokyo-based SBI Holdings to develop a mobile money transfer service.
Banks in Japan are not very keen on adopting blockchain for everyday transactions though considering the existence of the Zengin system, a cash movement platform.
Although the massive network is quite reliable, Suruga and Resona are interested in providing cost efficient services. Transfers not routed through Japanese banks are at estimated 45% of all transfers based on reports and this roughly amounts to $9 billion
There is a huge pressure to adapt to the times, according to observers and the need has grown due to remittances sent to Japan each year. Former Bank of Japan official Junichi Kanda said, "Demand is expected to grow as more Japanese live and work overseas.” Remittances coming from Japan are also set to benefit from these changes based on comments from observers as there are currently a number of immigrants who now work in the country and they regularly send money to loved ones abroad.
Sending money to and from Japan is quite expensive, according to Japanese banks and they are looking into slashing those prices through blockchain.
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