In 2015, Japan’s Financial Services Agency (FSA) established a consultation desk to make payments more accessible. However, the initiative was just the premise of Open Banking. In 2017, it changed the number of ownership banks must have in Fintech, and then it released a framework for regulating e-payments. In June 2018, the Revision of the Banking Act came into effect, requiring Japanese banks to develop systems for the introduction of open APIs (application programming interfaces) within two years.
In 2021, 98% of Japanese had bank accounts leaving 2% unbanked.
Japan is adopting an organic approach to Open Banking. Although it’s not mandatory, leading Japanese banks and Fintechs have started experimenting with APIs to build partnerships and participate in digital ecosystems.
Roughly 80% of all consumption in Japan is cash-based, placing Japan as a distinct outlier relative to other developed economies. One of the key factors for Japan’s high dependence on cash is the lack of a dominant electronic payment network that is universally accepted in Japan. Compared to China’s Alipay and WeChat Pay, for example, Japanese providers are fragmented and lack merchant integration.
However, more recently, the focus has changed as banks’ API strategies have focused on digital payments and cashless transactions due to the sheer size of the opportunity in Japan’s cash-based economy and the growing demand for cashless payments following the 2020 Tokyo Olympics.
Since 2017, many major banks have collaborated to develop unified QR payment systems.
Japan ranked second in Wiley’s Digital Skill Global Index 2021 in data ethics and integrity. In addition, it ranked sixth in the availability of scientists and engineers and ninth in both mean years of schooling and staff training.