As digitalisation growns in Japan, new opportunities for value-added services like cryptocurrency-related solutions and open banking systems are emerging, according to Julius Baer.
In a new study, the Swiss bank and its Japanese joint venture - Julius Baer Nomura Wealth Management - take a close look at the Japanese economy, productivity growth and digitalization.
With consumers using their smartphones for navigation, day planning, and payment across a wide range of services and city spaces, new opportunities for value-added services are emerging, according to the wealth manager.
New 5G infrastructures will become the backbone of communication between a growing number of smart devices, which will allow for a wide range of new digital services"
There is room for improvement in terms of digital transformation in the world's third-largest economy. Japan ranks only ninth among ten major countries in terms of digitalisation, according to the Dentsu Aegis Digital Society index.
Adding to the dynamics in Japan is the final spurt towards the 2020 Olympics, which is currently rejuvenating the country's growth centre in Tokyo with the upgrade of infrastructure, real estate and many facilities. The longer-term dynamics in the real estate market seem to be indeed much more favourable.
Even conservative financial services firms are looking to build on fintech opportunities by supporting J-Coin projects and the development of business services in Asia's future markets.
"New 5G infrastructures will become the backbone of communication between a growing number of smart devices, which will allow for a wide range of new digital services," the report stated.
Prime minister Shinzo Abe's administration plans to roll out 5G services in stadiums and central areas during the Olympics for visitors to better view the games on their smartphones. There are even ambitions to use the technology for self-driving cars, trains and buses for visitors.
Investments into digitalisation are already helping Japanese companies, according to Julius Baer. The bank filtered the top 100 Topix companies based on their asset growth over the past five years, and found that 70 firms were from the service sectors. Surprisingly, only one technology equipment company made it into the rankings.
"Digitalisation, it seems, is finally driving the performance in the information and communications technology (ICT) using sectors such as retail much more than in the ICT producing service sectors," the report said.