Tokyo FinTech Digest #4

Greetings from Tokyo!

We have still been in the middle of earnings season, so there is more new data out there than we can possibly digest, with the macro picture — the broad strokes of China’s 14th Five-Year Plan, the US election, and an increasingly dire pandemic picture in the US and Europe — throwing big shadows.

So here are some nuggets big and small that we have picked up this past week:

Nomura, ever on a quest to become a truly global player since its acquisition of Lehman’s international business during the Global Financial Crisis, reported a doubling of the share of its international business on the back of a stellar performance in the Americas; highly necessary given the long-term threat its traditional domestic retail franchise faces through zero-commission trading; future quarters will show whether this is sustainable

On the cryptocurrency side of the fence, GMO Financial Holdings reported a declining market share to 11.6% on industry volume of around USD 7bn during August; with an increase in Bitcoin value of over 20% during October, one would expect higher trading volumes again, however, it is doubtful whether the wallet size is sufficient to sustain the number of licensed exchanges in the long run, given low-/zero-commission campaigns
On the insurance side, MS&AD came through with two interesting announcements; first, they are deploying Tractable’s AI in Japan via both its core units, Mitsui Sumitomo Insurance (MSI) and Aioi Nissay Dowa Insurance (ADI), to accelerate accident recovery by as much as two weeks for hundreds of thousands of motor insurance claims a year; second, MS&AD Ventures invested into Vdoo, an Israeli cybersecurity startup for the Internet-of-Things (IoT) that has now moved from Seed to Series B in little more than a year
As we have pointed out in our first episode of “Tokyo FinTech μu — Japan’s Demographics”, by 2030 almost half the private wealth in Japan will sit with the 75+ year olds; FinTech startups, for the most part focused on millennials, have been missing out on that demographic; so it is noteworthy that Blackstone announced it will start taking investments from high net worth individuals in Japan as early as next year, with plans to raise billions of dollars in three to five years

Please also check out the other topics we covered this week:

Aozora Bank introduces the cashless teller — a day after SMBC announced it would do away with cash at 70% of its teller windows by 2022, Aozora topped this by going cashless at the teller before 2021 rings in
PayPay launches accelerator for mini apps — the ever-so-popular little programs running inside the app (instead of on the mobile phone’s operating system), originally developed by WeChat, are also gaining traction with PayPay and LINE
Killing it softly…bye, bye, postage stamps — killing it with software, actually; just a neat way of digital innovation by the German Post Office to allow you to handwrite a code on the envelope for the odd stamp that you still need to purchase, saving you a trip to the post office or the printing at home
Global Financial Innovation Network Cross-Border Testing — GFIN, a collaboration among global regulators, launches a multi-jurisdiction sandbox; sadly, neither the Bank of Japan or the Financial Services Agency are part of GFIN

eXponential Finance Podcast

This past week, we have published a podcast with Anton Golub, Founder & Chief Executive Officer at flovtec, a market maker and liquidity provider for digital assets, and previously a Co-Founder at Lykke. Anton shares an inside view on cryptocurrencies and securities tokens, from his experience working with exchanges and token issuers. Being regulated as an investment manager in Switzerland, flovtec’s compliance standards pose a challenge for this still maturing industry.

We have also new new leader for our all-time charts, with Max Kordek from Lisk just taking over top billing from Professor Haghirian. A very diverse list of topics making up the Top Ten, so a big thank you to our listeners for sharing our intellectual curiousity across this broad range.