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Japan: revamping data rules for a fintech world

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In March 2019, the Financial Services Agency of Japan (FSA) proposed a bill that may loosen data sharing rules for fintech and insurtech subsidiaries. Naoki Kanehisa of Atsumi & Sakai investigates

In March 2019, the Financial Services Agency of Japan (FSA) proposed a Bill that may loosen data sharing rules for fintech and insurtech subsidiaries. Naoki Kanehisa of Atsumi & Sakai investigates


In recent years, the use of personal and other information has been increasing exponentially against a background of rapid development in information communication technology (ICT). For example, it is now common practice that information provided by a company's customers is stored, analysed and used for the company's own business and, subject to certain safeguards, provided by the company to third parties.

Japanese financial institutions such as banks, insurance companies and securities companies are subject to strict regulations regarding their business scope and unlike unregulated general business operators, they are generally only able to use client information and data that they hold for their own business. However, in order to respond to changes in society as a whole, financial institutions will, for example, have to provide consulting services to local companies and contribute to the improvement of their management. In addition, through a greater use of their customers' credit information (and in so doing lowering the cost of credit), financial institutions will be better placed to meet the needs of their users by, for example, providing funding to individuals and small and medium enterprises (SMEs) that are having difficulties in obtaining loans and by improving credit evaluation for rental housing, car leasing and P2P transactions, etc. The wider dissemination of customer data helps banks and other financial entities to perform these new functions.

The FSA proposal provides that, in addition to their current businesses, financial institutions will be able to provide (with the customer's consent where necessary) customer information to a third parties (for instance, a company that offers services for local companies and users) if it 'contributes to the advancement of the business of financial institutions or the improvement of the convenience of its users'. The scope of this qualification is not clear, although it is anticipated that specific details will be forthcoming in the future.

If the Diet approves the FSA proposal, it is expected that foreign companies that provide financial institutions with services related to use of customer information will collaborate with Japanese financial institutions in the analysis, use and dissemination of such information.

Use of fintech and other subsidiaries

Since the 2016 amendment of the Banking Act, banks have been able to form subsidiaries and affiliated companies, including fintech companies (so-called 'advanced banking service companies'), that can use data from ICT and other technologies as long as they are engaged in a business which is expected to contribute to the advancement of the banking business and increase user convenience. The amendment has seen a marked move by banks to establish fintech companies as subsidiaries; a trend which is expected to accelerate.

However, insurance companies are not currently allowed to have a company equivalent to an advanced banking service company as a subsidiary, and so cannot have a subsidiary which engages in fintech or insurtech businesses. If the FSA proposal is approved by the Diet, it will become possible for insurance companies to establish technology companies, including overseas insurtech companies, related to their insurance business as subsidiaries; it is expected that such a change would result in Japanese insurance companies making a greater contribution to their customers' businesses and convenience as users.

About the author



Naoki Kanehisa

Partner, Atsumi & Sakai

Tokyo, Japan

T: +81 (0)3 5501 2111



Naoki Kanehisa is a partner in Atsumi & Sakai and currently heads the firm's London office. He has recently been assisting UK and European clients, including fintech companies, to set up their businesses in Japan. Naoki has presented seminars on fintech in London, including "Procedures and Licencing Requirements for Japan Market Entry for Asset Management and Fintech Businesses," at the Tokyo-London: Financial Seminar 2018, hosted by the Tokyo Metropolitan Government.