Wednesday, September 20, 2017

Fin/Sum FinTech Summit (Sept 19-22 Tokyo) Asset Management Panel Session

This week's FinTech Summit in Tokyo Sept 19-22 is very ambitious in scale and breadth. A wide number of startups, speakers and innovation can be found both from domestic and international startups. Over 100+ people attended the Asset Management session on Day 1 sponsored by QuickKnowledge. A great overview panel discussed a wide range of views from a very wide range of speakers. My personal notes and observations are highlighted below from all of the panelists.
Moderator Chiaki Kitazawa,  
Quick asset management panel discussion: FinSum Week Special FinTec is changing Japanʼs asset management
* Motoyuki Yufu, Financial Services Agency,  
* Chiaki Hayashi, Loftwork Inc Co-founder, 
* Hideto Fujino, Rheos Capital Works, CIO,
* Paul Chapman, Moneytree KK CEO, 

* The average 40 year old worker in Japan today can expect a future pension at age 65 that is 30% less than what baby boomers get today. It may even be worse with a later starting age.
* Japan counts 1800 Trillion Yen as the total estimated savings from deposits and personal assets held today.
* The US counts 8700 Trillion Yen as the total estimated, over 4+ times more than Japan with 1/3 the population.
* Why is there a gap today? Many Japanese do NOT invest in risk assets, they save in term deposits, and do not spend.
* US citizens donate 130,000+ Yen per year, but Japanese citizens only donate 2,500 Yen. Only 1/3 make donations.
* Why is this the case? Mainly from fiscal trauma as direct result of 2 decades of deflation after the Japanese bubble.
* A similar example was found in the US, during the great depression and war years from 1929-1949. By 1950, spending returned and boomed in the 1960s and beyond.
* There is a current negative defeatist mentality found with many Japanese. They work hard, but then get fired, they study English, but fail to make progress. They try and diet, but do not lose weight, they invest but with poor returns.
* All of this is a cycle, and within 20 years, a rebound can be expected, but FinTech may partly accelerate this rebound.
* Many Japanese feel that they do not have enough savings to be taken seriously by the financial industry. The minimum lump sum is not even known. They save without a clear goal. Many Japanese banks start calling customers once 10 Million Yen is on deposit. That seems to be a typical starting point.
* Many Japanese feel that without a large lump sum, they will not get proper attention, but even with small monthly contributions, the paperwork involved is still high. FinTech needs to help simplify this process now stuck in frustration.
* Today many Japanese securities firms still "push" financial products on customers based on commissions to the seller. They are not matched to the buyers needs using big data yet.
* There is a income gap even in Japan, and the top 20% of High Net Worth Individuals are the prime service target.
* Ordinary Japanese citizens feel that there is no attractive product offering for the remaining 80% of the population.
* Yes, senior baby boomers are sitting on large financial assets, but 30% of this senior population passes away every 10 years. Sadly, after inheritance is done, the children often just save any cash in term deposit savings, not investments.
* FinTech is needed to find customised product offerings that really meet new customer needs. New biometric tools on mobiles may help smooth the process to buy them as well. This process should minimize paperwork in future. The hanko needed today in documentation needs to be ended.
* FinTech needs to refocus not on the senior citizens with large lump sums today, but on younger customers in future. The best way to grow loyalty is to appeal early to a customer base. The mobile smart phone may be the perfect chance for a better and more efficient distribution platform in future.
* Major Japanese banks offer near zero interest rate returns on today's savings & term deposits. That is hardly close to the definition of proper asset management at all. A new revolution is needed to refocus on a growing wide scale market potential of customers, the population's majority. Not a small high net worth pool coming from only a small minority of the population. This use of Technology can be used in Finance very smoothly. Such is the obvious goal of many of the startups within FinTech today. A real valuable beginning.

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