Deloitte’s efforts in the field of FinTech and blockchain
Deloitte is actively involved in activities that underpin the development of the finance industry, including developing the FinTech ecosystem and building a blockchain platform. Fintech is top-of-mind for all executives. But with the ongoing developments in this space, what does it all mean for your business?
Deloitte Tohmatsu Group (Deloitte Japan ) has been actively involved in activities that underpins the development of the finance industry, including developing the FinTech (innovative services that use advanced IT technologies) ecosystem and building a platform for cryptocurrencies and their core technology, blockchain.
FinTech (innovative financial services that use technologies such as IoT, big data, and AI) may discover new industries, and be significantly changing the way industries operate and how cash flow and funding occurs. In addition, cryptocurrencies and their core technology, blockchain, which is expected to be used in a variety of fields, are taken as an opportunity to make Japan more competitive internationally.
Deloitte serves as a strategic partner at the World Economic Forum that gathers innovators around the world. At the World Economic Forum, Deloitte discussed with 40 major financial institutions around the world about financial disruptions, and released the article “The Future of Financial Services” (link is external) that identifies eleven innovative elements in five domains of the financial services.
In Japan, Yasuyuki Ogyu, Deloitte Tohmatsu Group (Deloitte Japan) FinTech and blockchain Leader (Director of Deloitte Tohmatsu Consulting LLC) participated as a moderator in the Study Group on the Integration of Industry, Finance and IT (Study Group on Fin Tech) organized by the Ministry of Economy, Trade, and Industry (METI). Deloitte has been making proactive efforts, including setting up FinTech Ecosystem Laboratory, participating in the Japan blockchain Association, and presenting challenges for the popularization of FinTech and blockchain and offering recommendations on the issues.
Deloitte Tohmatsu Group (Deloitte Japan) has been engaged in the following activities that underpin the development of the finance industry:
■Deloitte and four Okinawan financial institutions established Okinawa Payment Consortium
On April 26 2018, Deloitte Tohmatsu Consulting and four Okinawan financial institutions, along with launch support from HanaHana Works Okinawa, established the Okinawa Payment Consortium. The four Okinawan financial institutions were Bank of the Ryukyu, Bank of Okinawa, Okinawa Kaiho Bank, and Koza Shinkin Bank, and HanaHana Works Okinawa also hosted the symposium that would become the catalyst for this consortium (press release).
The Okinawa Payment Consortium was established to position Okinawa as an area within Japan that possesses developed infrastructure for several types of electronic payment, despite Japan’s overall relatively low adoption rate of electronic payment compared to other nations. Moreover, the consortium does not aim to merely promote adoption of e-payment systems; rather, the consortium wants to 1) build payment infrastructure that is based on the premise of utilizing data to contribute to the development of society, and 2) play an active role in Okinawa prefecture’s journey to becoming an IT hub. With these ambitions in mind, the consortium aims to establish a data bank and to generate and validate new, high-tech information industries.
■Working together with 20 companies and associations, including Japan’s three megabanks and Tama University, to launch the ICO (Initial Coin Offering) Business Research Group
Deloitte Tohmatsu Group (Deloitte Japan) participates in the ICO Business Research Group and our FinTech and blockchain Leader Yasuyuki Ogyu, serves as the Research Group’s Secretariat. The 20 companies and organizations, including Japan’s three megabanks, participate in the ICO Business Research Group, which has been focusing on conducting discussions to set ideal guidelines for forming a sound market since March 2018 in an aim to popularize ICOs as a fair and reliable way to raise fund. In April 5, 2018, a proposal report in PDF format that compiles rules necessary to establish ICOs as a sustainable way to procure fund(the 7 principles and 2 guidelines) was made public.
* An ICO is a way to raise fund through the sale of a cryptocurrency or tokens (virtual coins that derived from cryptocurrency). In comparison to an IPO (initial public offering), an ICO makes it easier to raise funds for a business, such as a start-up, that may not have access to large-scale fund-raising methods. This means that ICOs could be of great benefit for Japan as the country urgently looks for ways to revitalize its economy by stimulating entrepreneurship and innovation. On the other hand, it must be said that Japan has not yet developed a comprehensive framework for ICOs, nor has it fully understood their fiscal and accounting-related ramifications; globally, the lack of investor protection is also seen as a problem. The research group aims to define and plan what a reliable and sustainable ICO system should look like, and to implement it in order to build healthy new markets for the ICO business and to let businesses and investors’ economic activities contribute to the greater good.
For more information of Deloitte’s efforts in the field of FinTech and blockchain, please see below.
■Participation in the blockchain Study Group
The blockchain Study Group was established in December 2015 with the aim of clarifying the applicability of blockchain technology and general plans for utilization. Deloitte Tohmatsu Group (Deloitte Japan) (Deloitte Japan), Mizuho Financial Group, Inc., Sumitomo Mitsui Financial Group,Inc. and Mitsubishi UFJ Financial Group, Inc. participating in the study group promote research on blockchain technology. For more details, including the research group profile, the overview of the practical experiments for blockchain technology in domestic interbank payment operation conducted from January to September 2016, and experimental results and consideration, please refer to the “Report on Practical Experiment of Blockchain Technology in Japanese Domestic Interbank Payment Operation.”
■Start Practical Experiment of KYC advanced platform utilizing blockchain technology by the blockchain Study Group
The blockchain Study Group, conducted by Deloitte Tohmatsu Group (Deloitte Japan), Mizuho Financial Group, Inc., Sumitomo Mitsui Financial Group,Inc. and Mitsubishi UFJ Financial Group, Inc., has decided to launch another practical experiment on blockchain technology from July 2017 called “KYC (Know Your Customer) advanced platform”, following its previous experiment of "Domestic Interbank Payment Operation" reported in November 2016.
Click here for more details.
The practical experiment of KYC advanced platform utilizing blockchain technology by the blockchain Study Group was designated as the first FinTech practical experiment hub established by the Financial Service Agency in September 21, 2017.
For more details, please visit the official website of the Financial Service Agency
■Participation in the Study Group on the Integration of Industry, Finance and IT (Study Group on Fin Tech) organized by METI
The study group is designed for METI to widely discuss the possibility that innovative financial services that uses technologies such as IoT, big data, and AI will discover new industries and be significantly change the way industries operate and how cash flow and funding occurs, and work together with experts in each industry to examine policy issues and measures to be taken. Our FinTech and blockchain Leader Yasuyuki Ogyu, who serves as a moderator of the study group, spoke about the establishment of FinTech and its impacts on existing financial institutions (In Japanese only)as a presenter at the 2nd research meeting (held in October 16, 2015), and submitted reference documents at the 3rd research meeting (held in November 19, 2015).
At the 10th research meeting (held in February 22, 2016), Financial Services Industry Insurance Sector Leader of Deloitte Tohmatsu Group (Deloitte Japan), Kazunori Aoki（Partner of Deloitte Tohmatsu Consulting, Financial Services Industry Lead）spoke about the trend of FinTech in the insurance industry (In Japanese only).
■Set up FinTech Ecosystem Laboratory
Deloitte Tohmatsu Consulting LLC established “FinTech Ecosystem laboratory (In Japanese only) ” jointly with Thomson Reuters Japan KK (“Thomson Reuters Japan”) in March 2016.
This lab, which serves as a foundation underpinning the development of the finance industry, will keep working on discussing with 14 corporate participants, Commercial banks and investment banks, credit card companies, and FinTech providers, aiming to clarify how FinTech ecosystem should be built and seek measures to be taken by Japan’s finance industry.
In January 2017, Deloitte Tohmatsu Consulting LLC collaborated with Thomson Reuters Japan to establish the “KYC Unification Subcommittee (In Japanese only).” This subcommittee, which serves as a foundation underpinning the development of the finance industry, will keep working on discussing with 8 corporate participants, including city banks, regional banks, securities firms, credit card companies, and FinTech providers, aiming to build a platform to perform KYC (Know Your Customer) across industries and seek measures to improve the quality of financial services.
These research group and subcommittee are organized by Thomson Reuter Japan, with Deloitte Tohmatsu Consulting LLC serving as Secretariat.
■Participation in Japan blockchain Association
Japan blockchain Association (link is external, In Japanese only) was established with the aim of contributing to the development of the Japanese economy by offering safer and securer services that use blockchain, core technology of cryptocurrencies including representative Bitcoin. Deloitte Tohmatsu Group (Deloitte Japan) is a member of the association, Deloitte Touche Tohmatsu LLC participates as a support member, and our FinTech and blockchain leader Yasuyuki Ogyu serves as an advisor.
For your reference, the Japan Authority of Digital Assets (JADA) was reorganized into the Japanese blockchain Association on April 15, 2016.
■Participation in the Council of Experts on FinTech organized by The Center for Financial Industry Information Systems
Our FinTech and blockchain Leader Yasuyuki Ogyu serves as a committee member of the Council of Experts on FinTech (link is external, In Japanese only) made up of academic experts, representatives of financial institutions, and other experts.
He spoke about the trend of domestic and international FinTech (In Japanese only) as a presenter at the 1st council meeting held in October 5, 2016.
Due to increasing demand for financial services that use advanced IT technologies, this council, which aims to help Japan’s financial institutions accommodate customer needs and achieve the maximum benefit from innovation, discusses how the security measures should be.
From October 2016 through June 2017, total six council meetings are scheduled to be held. Click here（In Japanese only） for more details.
■Participation in the Review Committee for the Possibility and the Challenges of Utilizing blockchain Technology, with Japanese Bankers Association serving as Secretariat
”The Review Committee for the Possibility and the Challenges of Utilizing blockchain Technology (link is external, In Japanese only), with Japanese Bankers Association serving as Secretariat, was established in December 2016 with the aim of offering recommendations on concrete public-private partnership initiatives, as well as examining the availability of blockchain technology and its issues.
At the 1st meeting held in December 20, 2016, our FinTech and blockchain Leader Yasuyuki Ogyu spoke about details of the report issued by the blockchain Study Group on November 30, 2016.
At the 4th meeting held in February 20, 2017, our FinTech and blockchain Leader Yasuyuki Ogyu spoke about the impacts of the use of blockchain technology on the finance industry.
Part of the presentation is featured on page 15 of the study group report (link is external, In Japanese only). This report discusses the availability of blockchain technology in the banking operations and its issues, and outlines “public-private partnership blockchain initiatives,” which is expected of those involved in the public-private partnership initiatives, with the possibility of technology delivering innovation to the banking operations in mind. Please click here( link is external, In Japanese only) for more details.
Part of the efforts made by the study group is featured on “I-5 FinTech” on page 26 of "Future Investment Strategy 2017 — Reforms for the Realization of Society 5.0" (link is external, In Japanese only) by the Cabinet Office.
■Offering policy recommendations to the Special Mission Committee on IT Strategy of the Liberty Democratic Party, the ruling party in Japan Research Commission
Our FinTech and blockchain Leader Yasuyuki Ogyu participates as an advisor in the Special Mission Committee on IT Strategy of the Liberty Democratic Party, the ruling party in Japan Research Commission.
The Special Mission Committee on IT Strategy has been offering recommendations for the government ITC strategy for 16 years since 2001.
The Special Mission Committee on IT Strategy, also known as the “Digital Nippon” will continue offering concrete recommendations from 5 perspectives*, driven by public-private partnerships, based on insights obtained widely from public and private sources on a yearly basis, aiming to build “Nippon, the Data Nation,” particularly since 2010.
”Unified identification and anti-money laundering measures” proposed by Deloitte Tohmatsu Group (Deloitte Japan) at the committee held on April 25, 2017 has been included in paragraphs 42-45 of “Digital Nippon 2017 (released on May 23, 2017)” (link is external, In Japanese only).
In addition, details about “identification” are featured on “I-5 FinTech” on page 26 of "Future Investment Strategy 2017 — Reforms for the Realization of Society 5.0" (link is external, In Japanese only) by the Cabinet Office.
* The 5 perspectives: innovation first (involving innovation to explore new frontiers), citizens first (reviewing the administration system from citizens’ perspective), working-style first (realizing a new working-style through ICT and Kasumigaseki will be the first to put it into practice), sharing first (leveraging leisure assets to explore new markets), and security first (strengthening the safety and security and providing world-class security to explore new markets).
■Fundamental knowledge of FinTech (serialized in the Monthly Newsletters of the Regional Banks Association of Japan from February 2017)
From February through July 2017, Deloitte Tohmatsu Group (Deloitte Japan) contributed articles titled “Fundamental knowledge of FinTech” in the Monthly Newsletters of the Regional Banks Association of Japan.”
In recent years, IT companies have been shifting toward offering new financial services, mainly outside Japan, using their technologies, and in Japan, financial institutions are starting to collaborate with IT companies and other companies to offer new services and conduct practical experiments, among others.
By using topics that is helpful to understand “FinTech,” the articles provide fundamental knowledge, such as the background and current situation of FinTech, and case studies of other companies.
(Click here for the list of our featured articles)
■Future of FinTech (serialized in Nikkei Sangyo Shimbun (Business newspaper) from June to July 2016)
Deloitte Tohmatsu Group (Deloitte Japan) contributed articles titled “Future of FinTech” to Nikkei Sangyo Shimbun from June to July 2016.
The articles examine the future of FinTech by clarifying future development direction and issues to be concerned, based on fundamental knowledge, such as the background and current situation of FinTech, and events happening today.
(Click here for the list of our featured articles)
Furthermore, Deloitte Tohmatsu Group (Deloitte Japan) has been making proactive efforts to develop and popularize FinTech and blockchain technology by offering policy recommendations to the relevant ministries and agencies and giving lectures at seminars.
Deloitte Tohmatsu Group
Yasuyuki Ogyu, FinTech and Blockchain Leader