In the race to adopt Blockchain technology and cut costs, financial firms have to deal with multiple challenges. Japanese financial firms have been hit by the most basic of them of all – a shortage of technical experts.
Japan – regulation a positive
The Japanese government has been active in regulating cryptocurrency-based companies. A new law has been passed regulating Bitcoin exchanges, after the Mt Gox debacle. The Japanese Government passed a bill in May 2016, which recognized that virtual currencies have a function similar to money. Japan has also eased regulations, now allowing banks to invest in fintech firms, which is expected to help emerging fintech firms raise capital.
Shortage of experts
Reuters has reported that a shortage of Blockchain experts is hindering Japanese financial firms in adopting Blockchain technology. With few fintech startups in Japan, the number of Blockchain experts whose skills have been honed in cutting-edge technology is low. This situation is expected to persist, as these skill sets can only be developed over a period of time.
Language a barrier
Unlike English-speaking countries, Japan cannot depend on a quick import of foreign talent to meet its shortages. Japan is not an immigration-friendly country, unlike the US or Canada. The government has a points-based system for allowing highly skilled and educated workers the right to work in Japan. However, there is a language barrier which may prevent people who have no knowledge of Japanese from working with Japanese firms.
Collaboration way forward
While there may be a shortage of Blockchain experts, it hasn’t stopped Japanese Banks from collaborating with foreign partners like Ripple to fully leverage new technologies. A consortium of 15 banks, including the Bank of Yokohama and SBI Sumishin Net Bank have come together to study the use of Blockchain technology in payment transfers. Through the use of a settlement system developed by Ripple, they plan to cut transfer costs to a tenth of existing levels. Adoption of Blockchain technology in Japan is expected to progress, even if through the collaborative route.