Lack of experts may dash Japan’s hopes of becoming a vibrant competitor in the blockchain technology sector at the world stage particularly for financial uses.
Japan is the world’s second largest developed economy with an enviable record as one of the nations that have pioneered technological development.
However, Japanese financial firms’ efforts to adopt blockchain technology that could save billions of dollars in backroom processing and revolutionize the finance industry doesn’t seem to be yielding much fruit due to the shortage of startup companies, according to Reuters.
The country has few startups compared to other parts of the world. Hence the country’s finance houses have limited access to engineers and developers required for blockchain-related initiatives to each global peers which are passing blockchain savings on to clients.
The World Economic Forum says blockchain has captured the imaginations, and wallets, of the financial services ecosystem. It says over US$ 1.4 billion has been invested into the technology in the past three years and 80 percent of banks are predicted to initiate blockchain-related projects by 2017.
Consultancy Accenture reckons the efficiency of blockchain will cut annual costs in the financial industry by more than $20 billion by 2021.
Whereas, these finance houses just as others globally need this computer code that underlies the bitcoin virtual currency to use it to share vast amounts of sensitive data securely and in real-time. The technology could simplify the interaction between buyers, brokers and clearing houses that currently make equities trades take up to three days to settle. It can also eliminate stages of transactions like third-party verification.
Several financial institutions have developed, tested and even implemented the technology through startups in known fintech hubs such as London, New York, and Toronto.
Low Talent Pool in Hong Kong?
Chief Executive Hiroshi Shimo of Consensus Base told Reuters that there aren’t any technicians in Japan at the moment.
Shimo’s company has been hired by Japan’s second-biggest brokerage by revenue, Daiwa Securities Group Inc, to develop a blockchain application. He said he was hired because “there was nobody who could do it inside the company or at the big IT firms.”
The search for experts has been worsened by Japanese finance houses’ reluctance to pair with startups because of strict compliance rules, said Takao Asayama of blockchain firm Tech Bureau Corp.
According to Japan Venture Research, which tracks entrepreneurs in Japan, 167 startups are registered with it while in the United States, venture capital database CB Insights counts 3,300.
The shortage of blockchain talent may delay Japanese finance houses to compete with others. Japan has around 20 blockchain-related startups, said Chief Executive Yasunori Sugii of fintech firm Currency Port, while the U.S. has over 130. Those in Japan have raised $66 million over 10 deals since 2014, showed data from CB Insights, compared with the global total of $1.2 billion from 377 deals.
Featured image from Shutterstock.