Strong potential for FinTech in the Japanese Market

How does one get Big in Japan? Throughout the years this has puzzled the companies of the west and continues to be relevant in the FinTech space. As a  market it presents both a challenge and a great opportunity to FinTechs looking to expand (Deloitte1). In this blog we’ll explore the key features of the Japanese FinTech market.

The Opportunity

First and foremost, Japanese market represents a wealth of potential customers with large cash holdings to be mobilised. According to a recent Reuters article2 Japanese households currently hold over $17 trillion, more than half of which is highly liquid cash or deposits. Japanese corporations are also known for unusually large cash holdings.

In addition, Japan is the third largest economy in the world by GDP and is a stable and highly convenient society. As the outlook for VC and growth capital turns uncertain in western markets, rather than seeking a quick market share and easy profits, a convincing long-term investment into a large and relatively untouched domestic market may look more and more attractive.

Furthermore, Japan is open as an innovation hub3. It is ranked No.1 among G7 countries in R&D expenditure as a percentage of GDP and No.1 in the world in patent applications per million of population. There’s lot going on to facilitate innovation in Japan, such as supporting start-up ecosystems in several cities by the government. The Japanese Government is also keen to promote Japan as an international finance hub4 by assisting asset managers and FinTechs to enter the market. Japan holds incredible excitement and expectation for a world in which technology is highly integrated; the ‘Society 5.0’5 plan is a great example of this.


However, to unlock the great potential of the Japanese market there are several barriers that must be surpassed. Most obviously, entry to such a market could be a daunting prospect due to language and cultural barriers. Also, as the Deloitte article highlights the Japanese customer puts great value on quality. To meet high expectations deep market research prior to entry or partnerships with Japanese corporations are highly desirable.

Additionally, Japanese financial institutions and customer habits have historically been somewhat rigid. One of the most prominent examples of this for FinTech companies is the strong reliance on cash. Companies have opted for QR code systems rather than the more convenient contactless NFC solutions. Japan is not a market that simply follows global trends immediately. Winning over the Japanese business community and customers will take time and effort but will be well worth it.


Support for breaking into the market

While these hurdles may seem high the Japanese government has several organisations ready, willing, and able to assist. The first step is to talk to JETRO (Japanese External Trade Organisation). As a government organisation we can provide initial market research, introductions to funding or partner corporations and from there continue to assist should you wish to setup up an entity in Japan, all completely free of charge. There are also incentives from organisations like the Tokyo Metropolitan Government which has been featured on this blog previously6. Once again in 2022 they are holding financial awards competitions in both the Financial Innovation and ESG7 categories.

Beyond the capital

Tokyo, while an attractive hub, is by no means the only option. Focus on regions beyond the capital is an issue that JETRO keeps at the forefront. Two cities to watch in this space are Osaka and Fukuoka, both of which are vying to become financial hubs. Similarly, while JETRO’s UK office is London-based we understand there is so much more to the UK than just London. We look forward to cooperating with Scottish FinTechs that are interested in the Japanese market so don’t hesitate to reach out!

JETRO London Contact:

Author: Roderic Robertson

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Photo by Aleksandar Pasaric: