Innovation in the Japanese Financial Services Industry: Retail Payments
This report examines efforts in the financial services industry to spur innovation, with a focus on the retail payments market. In particular, the report addresses the following points:
- Japan is a market where cash payments long have been king.
- Credit cards are offered by many firms apart from banks and are the most common noncash method of payment.
- Debit cards have languished, but brand-specific debit cards are creating expectations of new growth.
- Japan’s many e-money schemes make the market unique. Many telecommunications firms and card companies are working to come up with mobile wallet solutions.
- The advent of the Payment Services Act in 2010 expanded regulations on server-based prepaid services, opening the door to a new market for payment and money transfer services.
- Japan’s electronic marketplace has been growing rapidly as business increasingly shifts to the mobile channel.
- Omnichannel initiatives are gaining momentum. The lines between channels are beginning to blur as bank, mobile, ATM, and branch channels are transformed, fused, and run in two directions.
- In the retail and the communications industries, there are many innovative initiatives afoot. For instance, the financial industry is implementing new approaches, including using a diverse variety of store formats in an organically coordinated way; observers expect to see the leveraging of online services to heighten value-added at brick-and-mortar stores, such as by unifying customer information and offering premium services.
Against the backdrop of the Japan Revitalization Strategy, a crucial component of recently reelected Prime Minister Shinzo Abe’s raft of economic policies called Abenomics, this report examines efforts in the financial services industry to spur innovation, with a focus on the retail payments market. The report is based on a 2014 survey tailored to accommodate the factors peculiar to the Japanese market.
“Innovative disruption is akin to the search for undiscovered continents: monumental discoveries that can provide new value to win over non-consuming consumers.” says Eiichiro Yanagawa, a senior analyst with Celent’s Asian Financial Services practice and author of the report. “Celent believes that technology, the market, regulations, and government are putting in place an environment to encourage innovation.”
The report contains 27 figures and 4 tables.