The financial industry is undergoing unprecedented transformations as digital technologies such as generative AI, blockchain, and cloud computing rapidly take hold, ushering in what many are calling a paradigm shift. This transformation not only focuses on enhancing operational efficiencies but also revolves around customer-centric innovations, requiring institutions to break away from legacy systems, bolster cybersecurity, and engage with new business models.
On December 12, 2024, the ‘Financial Innovation Conference’ held in Tokyo gathered enthusiastic participants eager to grasp the future of finance. This conference featured insights from industry leaders aimed at ushering innovation through collaboration and advanced digital solutions.
Ryosuke Ushida, the Chief Fintech Officer at the Financial Services Agency, opened with historical reflections on the crossover of digital technologies and financial services. He noted the increasing influence of Fintech, which has evolved from basic operations such as QR code payments to more complex modalities like stablecoins and security tokens integrated within the ‘Web 3.0’ framework. “Innovation will bridge the gap between existing financial institutions and new players,” Ushida stated, emphasizing the need for cooperation amid competition.
AI applications have become commonplace within the financial sector, moving beyond early use cases of fraud detection and market predictions. The introduction of generative AI is enabling improved efficiency and refinement of operations across various banks. Ushida responded to concerns surrounding AI’s challenges, including the 'black box' issue and hallucinations, clarifying, “It is misunderstood to say the Financial Services Agency opposes the use of AI; proper risk control and case expansion is what’s necessary.” On April 2024, the government’s “AI Business Guidelines” will be released to bolster this initiative.
Mizuho Financial Group is committed to utilizing AWS to transform and streamline its operations significantly. Takebum Yamamoto, the Vice CIO, expressed enthusiasm for the partnership, stating, “We aim to strengthen our collaboration with AWS.” Mizuho has begun implementing a multi-public cloud strategy across over 200 systems, training more than 1,300 AWS-certified employees within the group. The restructuring of their core system, “MINORI,” includes migrating some functionalities to AWS, with plans to expand the use of cloud services.
Observability platforms, such as those provided by New Relic, are gaining traction as they improve the performance and reliability of financial IT systems, which increasingly face complexity and demand for swift troubleshooting. Koji Aizawa from New Relic noted, “We need to maintain stability and change within our IT strategies.” He shared examples of successful implementations by financial institutions, underlining the importance of real-time data to preemptively identify and resolve issues.
Many institutions are also investing heavily in developing new opportunities through digital tools. Resona Group, under the direction of CIO Mikio Noguchi, is focusing on agile development systems, stating, “Our aim is to provide new value to our customers.” Noguchi highlighted their successful app, which has achieved over 8.4 million downloads, showcasing the group's commitment to maximizing customer experience through innovation.
The dialogue on fostering innovation continued with the discussions between leaders from Shizuoka Bank and Joyo Bank. Engaging with their stakeholders and ensuring all members of the organization have ownership of digital transformation was emphasized. Masaki Maruoka from Joyo Bank mentioned, “Digital should not be special; it should be commonplace—similar to using spreadsheet software.” This sentiment reinforces the cultural shift necessary for effective digital integration.
Both banks are piloting generative AI tools within their operations to raise employee engagement and usage rates. Efforts include developing intuitive environments from mobile phones and conducting contests to generate creative uses of AI.
The overarching takeaway from the recent activities within Japan’s financial sector is the collective shift toward leveraging digital transformation as not merely a trend but as core operational strategy. These institutions realize the need for collaboration, constant adaptation, and continuous learning to provide unprecedented value to their customers. Leaders like Ushida, Yamamoto, Aizawa, and Noguchi represent the forward-thinking ethos of the industry, emphasizing the goal of sustainable growth through innovation.