There is a fast-growing trend of companies seeking sources of growth on a global scale, for example, by creating subsidiaries in Silicon Valley and then using those subsidiaries to acquire other companies. On the other hand, property and casualty insurance companies and life insurance companies, which are focused on FinTech, have been investing in and collaborating with startups around the world. Japanese banks that had previously invested in American financial institutions now set their sights on Asia, which was experiencing remarkable growth, and aggressively sought to partner with or acquire local banks in countries such as Vietnam, Thailand, the Philippines, and Indonesia. Japanese megabanks realized that, in order to survive, they needed to break into the global market and so, about five years ago, they began shifting to other parts of Asia. Kaji: If we were to look at it from a more global perspective, another important factor is the fact that, in the Japanese market, severe population decline and persistent negative interest rates have made it harder for financial institutions to increase their revenue. Many financial institutions are pushing forward with a series of such efforts outside their usual operations. The involvement of finance in SDG- and ESG-related initiatives has become a trend around the world and financial institutions need to actively contribute in order to gain more support and trust from their various stakeholders, including the global market. To meet these various business challenges, financial institutions are changing at a fast pace: implementing DX internally, enhancing customer experience, and reforming their channel strategy.Īnother key factor spurring financial institutions to transform is the expectation for them to resolve social issues, for example, working on SDG- and/or ESG-related initiatives or reinvigorating local economies. Whether a financial institution can meet these diversifying customer needs will determine whether it can survive and even grow. Rapidly, more and more transactions are taking place online, rather than face to face. At the same time, with FinTech companies and players in other industries breaking out of old frameworks and creating many new financial services, competition has intensified. The relaxation of these regulations gave rise to opportunities for business growth. But, looking at it from another perspective, you could also say that they had been tied down by those same regulations, which is why any venture into new areas had been severely restricted. Traditionally, Japan’s financial institutions have been protected by regulations and have enjoyed stable business. Hattori: It’s because of major changes in the environment surrounding financial institutions. ―Recently, many financial institutions have been actively taking on challenges outside of their usual fields, for example, in areas related to DX, cross-industry collaborations, and initiatives related to SDGs and ESG.
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