Learning Practical FinTech from Successful Companies

178 Pages·2018·3.61 MB·English

by  Yoshitaka Kitao

Learning Practical FinTech from
Successful Companies

Learning Practical FinTech
from Successful Companies
Yoshitaka kitao
Cover design: Wiley
Cover image: © AF-studio / Getty Images
Copyright © 2018 by Yoshitaka Kitao. All rights reserved.
Originally published in Japanese in 2017 by Nikkei Publishing Inc.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Contents
Preface vii
List of Contributors ix
Planning and Editing Staff of the SBI Group xi
Chapter 1 Internet Revolution and Evolution of FinTech 1
Chapter 2 Evolution of the SBI Group 11
Chapter 3 Background of the FinTech Revolution 27
Chapter 4 Breakthrough FinTech Companies 31
Chapter 5 Issues for Financial Institutions and the Legal System 133
Afterword 151
About the Author and Editor 155
Index 157
v

Preface
Because I would like this book to be different than introductory books
written by academics and commentators in the field of finance, I have
focused on corporate managers that struggle day and night to bring about
a FinTech revolution.
I consider these people warriors trying to achieve this revolution.
I decided to have these warriors (managers) describe their visions of the
future and candidly write about what types of strategies and weapons
(technologies) they will use to realize them. I am not an editor and have not
given contributors to this book any instructions or expressed my opinion to
them in advance.
I wrote Chapters 1 and 2 and decided to make these chapters extremely
strategic and practical because I am a part of the SBI Group management.
I did not have other contributors read my drafts because I did not want
them to feel influenced by them.
Even when the drafts for all chapters were completed, I purposefully
put off writing the preface because I waited with bated breath for the ap-
pearance of concrete evidence that indicates how close this revolution is to
affecting all of us.
That evidence is the successful completion of a verification test
conducted by a certain consortium. The results were announced on March 2,
2017, and were widely covered by various media outlets the following day.
Efforts were led by the Japan Bank Consortium, of which 42 banks
(61 banks as of the end of December 2017), more than one-third of Japanese
banks, are members. This group successfully conducted a verification test of
RC Cloud, a settlement platform that makes use of blockchain technology
for low-value, high-frequency payments, and is working to commercialize
the platform within this year.
This platform is a cloud-hosted next-generation settlement infrastruc-
ture developed by US-based Ripple Labs Inc., an SBI joint venture partner,
and is the first such platform in the world. The platform makes it possible
to make low-cost (about one-tenth of traditional costs) payments in near
vii
viii Preface
real time. Work is currently underway to develop a payment app for mobile
devices, and a true payment revolution is set to occur in 2018.
This coincides with the dramatic growth of the robo-advisory service
offered by WealthNavi Inc. in partnership with SBI SECURITIES. Applica-
tions for accounts exceeded 37,000 in only a little more than a year since
the service was launched at the end of January 2017, and customers have
deposited more than 28.1 billion yen in assets.
These two developments definitively show that unless financial institu-
tions are quick to introduce the latest technology and increase customer
convenience, they will become less competitive and find it difficult to
survive.
All financial institutions must be aware that the FinTech revolution
will have an impact that vastly exceeds that of the Internet revolution.
Our customers are also sure to abandon loyalty to traditional individual
financial institutions and become extremely focused on increasing their
own benefits.
There will probably be a steady outflow of customers from financial
institutions that cannot quickly adapt, and the existing financial order will
be destroyed within a short time. This will add to the financial revolution
that is occurring simultaneously throughout the world.
The 17 managers who contributed to this book, including myself, have
renewed our resolution to write our own future, and we are confident that
the full realization of this revolution will be for the good of all people.
I would like to express my deep appreciation to all those who were
involved in publishing this book.
Yoshitaka Kitao