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Without the threat of serious inflation, risk-averse households in Japan have long been accustomed to parking money in their savings accounts, as opposed to investment vehicles yielding higher returns. But that might be set to change, thanks to efforts by the Japanese government.
After facing years of tight regulations, financial technology services now benefit from a climate intended to develop the sector. Regulatory changes have made it easier for fintech startups to access funding and were designed to foment innovation.
Revenues generated by the financial technology sector in Japan are expected to see serious growth over the coming years, according to February 2017 data from the Yano Research Institute. The firm predicts revenues from the sector will hit ¥19 billion ($174.7 million) in fiscal year 2017 and grow to ¥80.8 billion ($742.8 million) by fiscal year 2021.
Ecommerce company Rakuten is among those betting on the projected growth of the financial technology sector. In November 2015, the firm announced the launch of a $100 million global fintech fund that would focus on startups in Western Europe and the US in the short term. However, in a statement, the company also said it planned to “gradually expand operations around the globe.”
Rakuten is following through on that claim. In February, it was named as an investor in a Series A round worth ¥1.6 billion ($16 million) for Folio, an online security brokerage service serving customers in Japan.
Rakuten has already seen some positive trends for its fintech services. In its earnings statement for Q4 2016, the company reported that 2016 revenues from its fintech operations increased 7.6% year over year.
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