Name
Global FinTech Guide
Country _ Name
Japan
SectionTitle
Asset and portfolio management
Body
FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.

Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.

Introduction

Attitude of the country towards modern asset and portfolio management services

To promote innovation in financial services, regulations for asset and portfolio management services are kept to the minimum necessary to protect users.
As for social attitude, demand for easily accessible asset management applications is increasing due to the spread of cashless payments and the increase in the number of retail investors. Related businesses such as analytical services for Big Data accumulated by applications are also expected to increase sales, and the asset management application market is expected to grow.


Legal affairs

Obligations and requirements to provide asset and portfolio management, or ancillary services described above

In principle, registration as an “Electronic Payment Services” is required in order to both provide services to retrieve bank account information and provide it to depositor, or to transmit a depositor's remittance instructions to a bank by means of using an electronic data processing system, based on an entrustment from a depositor (the Banking Act, Art. 2, paras. 21 and 22, Art. 52-61-2). For registration, the following requirements must be met (the Banking Act, Art. 52-61-5, para. 1):

  • The business must have the funds necessary for performing electronic payment services in a proper and reliable manner (net assets must not be negative).
  • The business must have developed a system for performing electronic payment services in a proper and reliable manner.
  • The business must not have been subject to a disposition under the Banking Act, etc. (e.g., revocation of registration), but if subject to a past disposition, five years have passed since the date of the disposition.
  • For foreign corporations or foreign residents, a representative or agent in Japan must be appointed.
An Electronic Payment Services Provider shall comply with the following:

  • An electronic payment services provider shall clarify certain matters to users in advance via the Internet, or other communication methods (Banking Act, Art. 52-61-8).
  • An electronic payment services provider shall conclude an API agreement containing various contractual requirements with each bank that it provides user services for (Banking Act, Art. 52-61-10).
  • An electronic payment services provider shall submit a notification to the authorities in certain cases, such as when it starts electronic payment services and when it concludes or amends an API agreement with a bank (the Banking Act, Art. 53, para., the Ordinance for Enforcement of the Banking Act Art. 35, paras. 6 and 8).
  • An electronic payment services provider shall prepare and maintain general ledgers related to the electronic payment services for 10 years. In addition, a report must be prepared for each business year and submitted to the authorities with a balance sheet and profit and loss statement (Article 52-61-12 and Article 52-61-13 of the Banking Act).
A financial service intermediary business operator that acts as an intermediary for services such as deposits, insurance, securities transactions, and money lending, among others, may conduct this business by submitting a notification without registration for “Electronic Payment Services”. However, this is only possible if the intermediary conducts financial services using information and communication technology, and if other certain requirements are met (Art. 12, Art. 18, paras. 1 and 3, Act on Provision of Financial Services and the Development of the Accessible Environment Thereto).

Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area

It should be noted that if an electronic payment services business is commissioned by a bank or receives economic consideration from a bank, it is subject to regulations as a bank agency services.

If asset and portfolio management services include services related to investment advice, investment management, or investments (including the sale and purchase of securities in the market), then a business operator is required to obtain registration under the Financial Instruments and Exchange Act.


Economic conditions

Market size for asset and portfolio management services and biggest companies in this business area

According to the research by a private research company in 2023, the market size of asset management applications was estimated to be approximately 3.3 billion yen as of 2021 and is expected to reach 13 billion yen by 2027. The largest company in this business is Money Forward ME with more than 15 million users of the service (as of November 2023).

Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
The asset management application "Money Forward" provides more than 2,600 financial-related services, including those related to financial institutions, credit cards, online shopping, and pensions. Once an account is registered, it automatically retrieves the relevant bank account statement and balance, and with this creates a household account book. Zaim, which is one of the biggest companies in this business and is also able to connect to online financial accounts, also offers a service that automatically reads items and amounts when paper receipts are photographed with a smartphone camera.



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