Japan has made an all-out effort to strengthen its fintech
space amid perceived threats from Silicon Valley, but different
ownership laws have created unfairness.
The Diet, Japan’s parliament, passed a law on
May 25 last year to allow domestic financial institutions to
acquire tech-driven start-ups, with the new legislation
expected to take effect on April 1.
Seeking to protect the country’s banking
industry from competition posed by Silicon Valley, lawmakers
also agreed to scrap a five percent ownership cap imposed on
banks looking to invest in tech companies.
But counsel in Japan point to vastly different rules
governing the operation and ownership of banks by non-financial
parent companies. The current banking law permits non-banks,
such as Sony and e-commerce firm Rakuten, to operate financial
services with a licence. This has led to major conglomerates
running banks as part of the group, enabling them to offer
lending services to...