Name
Global FinTech Guide
Country _ Name
Japan
SectionTitle
Online banking services
Body
FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).

API-Banking:

API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.

Through these services FinTechs offer services with new functions, e.g. enabling customers to manage their accounts online and in real time.

BaaS – Bank as a Service/BaaP – Bank as a Platform:
 
The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which “use” the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.

Introduction

Attitude of the country towards online-banking services

Many banks provide online banking services through apps and other means, and these services are widely used among the public. Traditionally, banks have been the main providers of financial services, so it is more efficient for fintech companies to have partnerships with banks and use their functions and ICT systems for offering new services. The Japanese government actively encourages cooperation between traditional financial institutions and start-ups to promote open innovation by, among other measure, amending the Banking Act. Banks have already opened their API under the amended Banking Act.

Along with banks' opening APIs as mentioned above, apps for household expense management and cloud accounting are provided. In addition, in the BaaS area, embedded finance services are provided in a variety of industries, including apparel, mobility, and consumer electronics.


Legal affairs

Obligations and requirements to provide online-banking services described above

There aren’t strict requirements for financial institutions with a banking business license to start online banking services. However, there are extra security-related requirements for providing online banking services under the Banking Act and guidelines from the Financial Services Agency (“FSA”). In light of the recent increase in fraudulent transfers abusing online banking, such as phishing scams, financial institutions are expected to implement measures to address these issues.
On the other hand, it is not feasible for FinTech-startups to obtain a banking business license since the examination process for a banking business license requires substantial time and cost. Thus, it is advisable for FinTech companies to have partnerships with banks to provide their new services through the banks’ API. The Japanese government introduced a business category, “Electronic Payment Service Providers”, through the amendment of the Banking Act in 2017 in order to promote open innovation through open APIs and to establish appropriate regulations for the users' protection.
A business operator providing any of the following services by accessing a bank's ITC system on behalf of users falls under the category of Electronic Payment Service Providers and must obtain the appropriate registration.

  • Transmitting user’s instructions on funds transfers and other transactions to banks on behalf of their users (ex. a one-click service to request bank transfers to multiple payees).
  • Obtaining account information from banks on behalf of a user and providing this information to the user (ex. a service obtaining and aggregating information such as account balances and transaction history, in order to manage them through a household expense app).
Electronic Payment Service Providers are obliged to provide certain information to users and to execute contracts with banks regarding demarcation of their responsibility for potential user damages as well as how to manage users’ information.
If a business operator provides services such as fund management as an agent of a bank, rather than on behalf of users, such services are subject to regulations applicable to Bank Agency Services defined in the Banking Act, and the business operator must obtain the relevant license under the Banking Act.

Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area

There was concern that if an Electronic Payment Service Provider receives fees from not only users but also banks, they may also fall into the category of Bank Agency Services requiring a license under the Banking Act.
The FSA addressed this concern and published guidelines to clarify the criteria so that Electronic Payment Service Providers do not fall under the requirements of the Bank Agency Services. In the guidelines, it was clarified that if an Electronic Payment Service Provider only receives ICT system usage fees, advertising fees, fees for information provision or other similar fees, then it does not fall under Bank Agency Services, even though it receives financial payment from banks.


Economic conditions

Market size for online-banking services and biggest companies in this business area
Online banking services have been widespread in Japan. According to a survey from Japanese Bankers Association, the usage rate by individuals in 2024 was estimated to be 64.5%. In addition, new FinTech players, including Electronic Payment Service Providers, can provide services for notification of payment instructions and for obtaining account information by accessing bank’s ICT systems through open API. Many business operators have entered into API agreements with banks after obtaining licenses. As of May 2025, 118 operators are licensed in Japan. Major operators include Money Forward, which provides asset management apps, and Freee, which provides cloud-accounting services.

Additional comments regarding the economic situation for online-banking services or what FinTech’s must be aware of in this business area

Many users have concerns on ICT security in addition to fees and reliability when selecting online banking services. Recently, there have been a number of fraudulent transactions in the financial industry. The most common are phishing and other fraudulent attempts by using e-mail or short message service (SMS) to steal the IDs and passwords of online banking users and illegally transfer their deposits. Thus, online banking service providers should monitor and pay sufficient attention to the safety of their ICT systems.




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