Innovation in the Japanese Financial Services Industry, Part 2: Panel Discussion

Celent hosted Innovation & Insight Day Tokyo on June 5. Following the event presentation titled "Digital Financial Services and New Innovation Initiatives," which focused on Celent's innovation survey results, a panel discussion was held.

This is the second in a two-part report providing an overview of event proceedings.


Five leading experts in Japan's financial industry joined the event as panelists. Celent would like to offer a heartfelt thank-you to these individuals for taking part despite the pressure and the presence of competition and many disclaimers. The panelists’ wealth of experience and sheer passion for innovation was palpable and the content thought provoking. Above all, the impassioned and experience-informed comments of panelists displayed the confidence of Japan's financial industry. Below are some of the more salient comments that demonstrate the spirit and mindset of innovators in Japan.

What motivates your firm to innovate?

  • "Responding to customer expectations."
  • "A backdrop of growing user needs and the proliferation of technology and the environment to meet these needs."
  • "Our objective is to remove all inconvenience from the customer experience."
  • "We aspire to offer financial services that achieve exactly what people feel they need and consumers think they want."
  • "Innovation is the lifeblood and fate of a corporation."


What drives innovation at your firm?

  • "Aligning innovation objectives and technology employed."
  • "Integrating technology and compliance is important."
  • "Amplifying the motivation and drive of each employee to take action."
  • "Reflecting the intentions of management."
  • “Resisting the temptation to seek short-term growth.”
  • "Supporting management philosophies that bet on uniqueness."


The threat and opportunity of disruptive innovation

During the proceedings there were questions and opinions from participants exchanged with the moderator:

  • "There is no special opportunity for innovation. It is important to reflect innovation in daily management. That is something that we have done since we started our business and something that we will continue to do. Innovation is simply naturally part of what we do.”
  • "We do not see disruptive innovation as a threat. Rather, for the development of the industry as a whole, the kind of shakeout such innovation entails is necessary. We will undergo challenges and survive—and look to take on more such challenges.”


Celent concluded the event with the below message.

Managers: Have faith and confidence in innovation

The importance of leadership and management responsibility in innovation is self-evident. At the same time, innovation is a mid-to-long-term journey—more a marathon, than a sprint. Failure is sometimes to be allowed. In addition, it is not uncommon to destroy a corporate culture that has been fostered over many years. An intense commitment to innovation on the part of management itself is required. Technological drivers continue to advance and case studies of successes only increase. Mangers: Be confident.


Distinguish between disruptive innovation and kaizen (improvement), and the need to tackle the former

The greatest factors hampering the progress of disruptive innovation are not to be found outside a company but within it. Especially within large corporations, where tendencies such as the below are seen; conversely, these tends to derail innovation. These tendencies include the following.

  • Compared with start-ups and small or medium enterprises, large firms boast a wealth of capital and business resources.
  • In particular, these resources include human resources and technology, which can be channeled to R&D.
  • These companies often have business operations that require 360-degree management and much competition
  • Such firms are often home to isolated “black sheep” employees that seek to innovate.

If you neglect innovation, cannibalization can be expected to take place not only in your core business areas but in new businesses as well. To keep innovators from being ostracized as black sheep, it is important to clearly distinguish between the accumulation of kaizen (improvement) on a daily basis in core operations and disruptive innovation, and, in particular, it is important to direct management and initiative toward the latter.


Initiatives and leadership that are not negative contribute to positive value standards

Of course, trusting in your management resources, in particular in your personnel and technology, and putting effort into your business battles over “invisible continents,” “immeasurable risk” and “non-consuming consumers” is important. However, in such challenges when results do not appear with time, then you should not underestimate the power of disruptive innovation. Furthermore, it is key “to always be positive.” Leadership and initiatives that acknowledge and embrace diversity and difference and that do not deny any possibility are needed.


Today no industry or industrial structure is immune to change and, like plate tectonics, the ground around us is always shifting. Digital technology is doing more than changing products, services, consumer experiences, and expectations; it is also radically changing value chains and business models.

Until now, Japan’s financial industry has developed by virtue of outstanding leadership and the agile introduction of technology. Celent would like to emphasize anew the importance of innovation to Japan’s financial industry, buttressed as it is by people and technology. The results of Celent’s recent innovation survey hinted at further reform to come in Japan’s financial industry. When it comes to innovation, now is an opportune time for commitments from top management and fresh initiatives from technology vendors.

Undertaking this innovation conference was a major challenge for Celent Tokyo. However, any undue anxiety completely vanished amidst the enthusiasm of survey and event participants. The Japanese financial industry is extremely positive and enthusiastic when it comes to innovation. Celent would like to express its deep gratitude to the professionals in the financial industry who took time to participate in this event in various capacities, and we hope that it will prove in some way useful to your continued success.


Fig. 2 Structures to Support Innovation: Financial Services Institution / Vendor Comparison


Source: Celent Innovation Survey 2013/2014

Innovation in the Japanese Financial Services Industry, Part 1: Two Gaps

On June 5, nearly 120 individuals from Japan's financial sector and the financial technology sector gathered to participate in our Innovation & Insight Day Tokyo 2014. This is the first of a two-part recap providing an event overview and recounting event highlights.

The first keynote address compared the May 2014 Japan Financial Industry Innovation Survey with a similar global Celent survey conducted last October. This comparison pointed to two existing gaps.


Gap Number One: A Leadership Gap

1. Perception of the importance of innovation

"The next few years innovation will be extremely important. Customer expectations are changing very rapidly and it is crucial to act so as not to fall behind." The ratio of respondents who agreed with this statement was similar in Japan and globally as shown below.

  • Global: 79%, Japan: 81%

—Conclusion: There can be no doubting the importance of innovation.


2. Leadership and innovation initiatives

"Our firm has an individual in charge of innovation (a chief innovation officer)."

  • Global: 11%, Japan: 7%

"We have an organization in charge of innovation (center of excellence)."

  • Global: 27%, Japan: 7%

"Innovation-related leadership relies on proponents at the CEO level."

  • Global: 62%, Japan: 85%

—Conclusion: There was a clear lack of leadership among top management when it comes to innovation initiatives.


3. Three significant impediments

Global: 1) Daily work operation routines, 2) Internal habits and practices, 3) Inadequate support system.

Japan: 1) Internal habits and practices, 2) Lack of senior management support, 3) Daily work operation routines.

—Conclusion: Both globally and in Japan, in contrast to the high levels of awareness of the importance of innovation, at financial institutions there was a distinct lack of leadership.


Gap Number Two: Gap Between Financial Institutions and Vendors

The Japan survey asked both financial institutions and financial solution vendors about innovation-related initiatives. Responses indicated another gap here between financial institutions and these vendors.

1. Years promoting innovation

There was no significant difference between financial institutions and vendors, with both recording similar figures:

  • Three years or less: 54%, Five years or more: 30%

—Conclusion: Financial institutions seem to interpret the fact that technology-supplying vendors possess approximately the same level of experience as themselves as meaning that innovative initiatives cannot benefit from sufficient experience.


2. Organizational and structural

"A chief innovation officer has been appointed"

  • Vendors: 24%, Financial institutions: 7%

“Have established a center of excellence”

  • Vendors: 14%, Financial institutions: 7%

"CEO-level proponents of innovation are relied upon for leadership"

  • Vendors: 67%, Financial institutions: 85%

—Conclusion: With a slightly lower degree of reliance on upper level management for innovation leadership, vendors are slightly superior.


3. Departments that lead innovation

Financial institutions:

  • Business departments lead: 30%, IT departments lead: 11%

Vendor innovation proposals:

  • Directed to business departments: 14%, Directed to IT departments: 17%

Undertaking initiatives in both business and IT areas:

  • Financial institutions: 59%, Vendors: 69%

—Conclusion: There is a visible gap between financial institution innovation IT initiatives and vendor business sector initiatives.


4. Digital financial services initiatives

There was also a visible gap when it came to the priority level of digital financial services (innovative financial services that harness digital technology) as advocated by Celent.

  • Financial institution priority areas: Process improvements, transaction feature enhancements, product and service customization
  • Vendor initiative areas: Three sectors were overwhelmingly dominant: big data, mobile two-way communication, omnichannel

—Conclusion: Survey results indicated a general tendency for financial institutions to be more conservative and vendor proposals to be more aggressive.


What exactly is this gap and what does it signify? This gap is between the proposals of vendors that feature the newest or hottest technology and the initiatives of financial institutions, which have yet to recognize the advantages of or are still evaluating such technology or technological initiatives. At the very least, currently it is easy to see that, unfortunately, vendors and financial institutions are not yet on the same page when in comes to what they are looking for in initiatives. Moreover, it could be that even if new technology is applied incrementally (to drive improvement) it could also prove to be a driver of disruptive innovation.

In addition to responses that can be numerically tabulated and analyzed, the survey also allowed participants to articulate freely their own invaluable opinions. A more detailed analysis of this survey and examination of innovation in the financial industry in Japan will be available in the upcoming Celent report "Innovation in the Japanese Financial Services Industry: The Gap between Management and Initiatives." Please be on the lookout for it.


Fig. 1 Comparison with Other Industries: Global / Japan Comparison

Compared with other industries, financial services firms (e.g., banks, insurers, asset managers) innovate…


Source: Celent Innovation Survey 2013/2014



セレントは、去る6月5日、「イノベーション&インサイト・デー 東京 2014」を開催した。「デジタル金融サービスと新たなイノベーションの取り組み」と題した本イベントでは、セレントによるイノベーションサーベイの報告に引き続き、パネルディスカッションを実施した。





  • 「顧客の期待に応えるために」
  • 「ユーザニーズの高まりと、それを実現する環境や技術の普及を背景として」
  • 「顧客経験の不都合をなくすことを目的に」
  • 「人の気持ち、生活者の想いを実現する金融サービスの提供を目指して」
  • 「イノベーションとは、企業の宿命である」



  • 「イノベーションの目的と採用する技術とのアライン(整合)」
  • 「テクノロジーとコンプライアンスの摺合せが重要」
  • 「従業員ひとりひとりの取り組み姿勢(やる気)が加速」
  • 「あくまでマネージメントの意思を反映」
  • 「爆発的な成長への誘惑を絶ち」
  • 「ユニークさに賭ける経営哲学が支える」



  • 「イノベーションの機会に、特別なものは無い。日々のマネージメントにイノベーションを反映することが重要、創業以来そうしてきたし、これからも続ける。イノベーションは自然体」
  • 「破壊的なイノベーションに、脅威は感じない。むしろ、業界全体の発展のためには、そうした荒波が必要。そうしたチャレンジは受けて立つし、そのようなチャレンジを続けてゆきたい」





  • 中小企業やスタートアップと比較して、圧倒的に潤沢な資金
  • R&Dに投入できる十分な経営資源(特に、人と技術)
  • (360度のマネージメントが必要な)多様な事業部門と多くの競合
  • 孤立する「ブラックシープ(黒い羊)」









図 2. イノベーションを支援する組織(金融機関・ベンダー比較)

Innovation survey2

出典: セレント「イノベーションサーベイ」2013/2014


6月5日、日本の金融業界と金融テクノロジー業界から約120名のご参加を頂き、「イノベーション&インサイト・デー 東京 2014」を開催した。本稿では、本イベントの要諦を2回に分けて報告する。



1. 重要性認識

  • グローバル:79%、日本:81%



2. イノベーションに取り組むリーダーシップ

  • グローバル:11%、日本:7%


  • グローバル:27% 日本:7%


  • グローバル:62%、日本:85%



3. 3大阻害要因

  • グローバル:①日常業務のルーチン②社内慣習③サポート体制の不備
  • 日本:①社内慣習②経営幹部のサポート不足③日常業務のルーチン



1. イノベーション推進の経験年数

  • 金融機関とベンダーの間で大きな差異はなく、両者とも、
  • 3年未満:54%、 5年以上:3割強



2. 組織・体制

  • ベンダー:24%、金融機関:7%


  • ベンダー:14%、金融機関:7%


  • ベンダー:67%、金融機関:85%



3. イノベーションを主導する部門

  • 金融機関:ビジネス部門が主導:30%、IT部門が主導:11%
  • ベンダーのイノベーション提案:ビジネス部門向けは14%、IT部門向け:17%
  • ビジネス・IT両部門での取り組み:金融機関:59%、ベンダー:69%



4. 「デジタル金融サービス」への取り組み

  • 金融機関の優先分野:「プロセス改善」、「取引機能拡張」、「商品・サービスのカストマイズ」
  • ベンダーの取り組み分野:群を抜いて「ビックデータ」、「モバイルと双方向通信」、「オムニチャネル」





図 1. 他業界と比較した、金融機関のイノベーションの進捗レベル認識(グローバル比較)

Innovation survey1



データベース・アズ・ア・サービス (DBaaS): グローバル金融機関におけるプライベートクラウド実装





1. グローバル金融機関におけるIT基盤に対する4つの期待:

  • オンディマンドサービス
  • プロビジョニングの迅速性、弾力性
  • サービスの計測可能性
  • 監査とセキュリティ対応

2. 期待を実現した4つの原則:

  • サービスのカタログ化とセルフサービス
  • 適用技術の標準化
  • リスク、セキュリティの一元管理
  • 運用保守の標準化

3. 本事例を成功に導いた7つのKFS:

  • プログラム管理
  • エンタープライズアーキテクチャ(EA)アプローチとサービス定義
  • エコシステム(LCM)志向
  • サポートモデル
  • セルフサービス
  • インベントリ―とデータ品質管理
  • ユーザ部門とのコミュニケーションとIT需要管理


セレントは、金融機関におけるクラウド適用[1]をはじめとした、革新的なIT活用の取り組みを多数レポートしてきた。また最近時、1) デジタル&オムニチャネル、2) イノベーション&エマージングテクノロジー、3) レガシー&エコシステムマイグレーション、の3分野にフォーカス[2]し、金融業界におけるイノベーティブな取り組みをリサーチしている。多くの来場者にとって本事例は、コスト削減を超えて、新たな事業価値を生み出すテクノロジー・プラットフォームとしてのITを見直す契機となろう。正に、エマージングなテクノロジーを用いた、エコシステムマイグレーションの好事例とみなされる。


図 : 金融機関におけるとITソーシングモデルの変化

sourcing models_JAPANESE

出典: セレント


[1]「クラウドが加速する日本の金融システム・金融IT産業のサービス化:鍵を握るモジュール化技術」(2011.7) など

[2]「2014年モデルバンク パート1:デジタル/オムニチャネル・バンキング」(2014.4) など

Database as a Service (DBaaS): Private Cloud Implementation at Global Financial Institutions

Spring is here and with it so is convention season. This year in Japan, innovation is proving to be an even hotter buzzword than Abenomics.

Innovation was prominent at an Oracle convention event that took place in late April. IT experts from across industries and around the globe converged in Tokyo where they presented several instructive case studies on innovation in practice.

In kicking off the event and prior to a notable presentation by the CTO of a major financial institution, an Oracle senior director noted that reducing costs and investing strategically are eternal challenges in the systems sector. He pointed out that in recent years, the cloud has spread and emerged as a potentially powerful weapon to help solve in a balanced way these dual challenges of cost reduction and strategic investment, although there are as yet few examples of financial institutions using the cloud well. As such, the Oracle event was dedicated to introducing cases in which financial institutions have harnessed the cloud successfully in terms of IT strategies and private cloud strategies.

At this event, Celent discovered one ideal IT sourcing model initiative that epitomizes how a financial institution should migrate a global database to a private cloud.

Celent has broken down and organized the key points of this case study as follows.

1. Global financial institutions expect great things from the cloud when it comes to IT infrastructure in these four areas:

  • On-demand services
  • Prompt and flexible provisioning
  • More quantifiable services
  • Facilitating audits and security

2. The four principles that led to the achievement of these expectations:

  • Cataloguing of services and self-service
  • Standardization of applied technologies
  • Unifying risk and security management
  • Standardization of operation and maintenance

3. Seven key factors to success in this case:

  • Program management
  • Enterprise architecture (EA) approach and service definition
  • Ecosystem-focused (life cycle management) approach
  • Support model
  • Self-service
  • Inventory and data quality management
  • IT demand management and communication with line of business

In addition to the scale of this case, which involved the migration of over 10,000 nodes and nearly 300 instances of provisioning profiles, the initiative also allowed the multinational company in question to achieve a follow-the-sun operation for capital markets worldwide. The firm has created an outstanding IT infrastructure in terms of mission critical robustness. However, more than anything, this case study approached the ideal in terms of IT sourcing models in that it enables self-implementation of database provisioning operations and management in addition to being able to provide vendor products and services. It is easy to imagine that it was this EA that proved the key to success. Of course, while this is a case study of advanced IT operational capacity at a top-tier financial institution, the agile nature of this initiative was clearly stimulating to the Japanese financial institutions that were in attendance.

Celent has published countless reports on innovative IT applications and initiatives including on how financial institutions can and are using the cloud to enhance their businesses[1]. In particular, recent Celent research has focused on IT and innovation in the following three areas: digital and omnichannel, innovation and emerging technologies, and legacy and ecosystem migration[2]. For many participants at the convention, this case study likely proffered more than a means to reduce costs, but also a chance to revisit their IT approaches to create a technology platform that fosters greater business operation value. This case is a shining example of ecosystem migration using emerging technology.

Both vendors that focus on providing solutions as well as vendors that focus on IT services are offering integrated solution services that vertically integrate hardware, software, system building, system operation and maintenance. In addition, financial institution infrastructures including many types of shared systems are available for use in their current service formats.Above and beyond the system building of SI vendors seen so far rooted in on-premise approaches, Celent expects the IT sourcing models of financial institutions to diversify at a rapid clip.


Fig: Changes in sourcing models

sourcing models_ENGLISH

Source: Celent


Celent defines innovation as introducing novel approaches that improve on what has come before and Celent calls individuals that orchestrate this innovation entrepreneurs. Celent also believes that technology offers a medium to change that can yield greater value for customers. We are in an era of intensifying competition and only the financial institutions that make technology their friend and leverage it intelligently will remain when the dust settles. And DBaaS is a prime example of this in practice.


[1] See Celent’s report, Cloud Computing in the Japanese Financial Services Industry, November 2011

[2] See Celent’s report, Celent Model Bank 2014, Part 1: Digital and Omnichannel Banking, April 2014, among others

CARTES Asia: A new payment industrial revolution in SoLoMo era

For participation in the ceremony of the award, where I was honoured to be a member of the jury, and presentation in the conference, last week, I visited Hong Kong. The venue, Hong Kong Convention & Exhibition Centre is vibrant as always. There were three big events around the same time.

The event, CARTES Asia is the leading smart technologies event in Asia Pacific. CARTES Asia has brought together innovative solution providers and market leaders from the card manufacturing, payment, security, identification and mobility industries. Some 3,000+ visitors in the banking, telecom, transportation and security sectors have a unique opportunity, not only to discover international exhibitors’ innovative technologies, but also to enhance their knowledge through the conferences and round-tables, which present the latest trends. I gave a presentation for the Cards & Payments session entitled "Payment Systems Trends in Japan."

The Asian SESAMES Awards aim to reward the most innovative technological applications developed for the Asian Pacific market in the field of smart cards, digital security, identification, secure transactions, and contactless technology. The Awards reward the best projects in 3 categories: Advanced Payment and Mobile Money; Card manufacturing & Personalization; and Secure Identity. As a juror, I evaluated the submissions independently and impartially.

Through the examination of this award, innovation, was proved to happen in places where new markets and new technology meet. Award winners all developed the frontiers of both technology and market. And the priority in technology and market was SoLoMo (Social, Local, and Mobile) once again. We are in the midst of ongoing technological changes and evolution, i.e. a new payment industrial revolution in this SoLoMo era.

About CARTES Asia:


Celent Round Table: When and Where Innovation Happens

Innovation is a key issue for financial institutions and a highly complex topic that demands attention when considering the business operations of tomorrow.

In light of its importance in the financial industry, Celent has planned two events in Tokyo focusing on innovation at financial institutions. The first was an innovation roundtable that was held last month. This and similar roundtables have been extremely well received in money market centers worldwide.

For the recent Tokyo event, a number of opinion leaders from Japan’s financial industry gathered to discuss and share two things: insights on effective approaches to promote innovation; perspectives of other leaders. Participants represented an array of sectors, including banks, insurers, leading brokers, dedicated online businesses, and foreign-capitalized companies. However, this diversity of participants from entities with differing business scale, history, format, and market size, shared a uniform passion when it came to their comments on innovation.

Prior to the roundtable discussion, Celent set the stage with two presentations.

The first, titled “The Search for Disruptive Innovation," took up “promoting innovation” as a theme. Specifically, it covered the reality and expectations of innovation among global financial institutions based on a Celent survey on innovation. The presentation put forth the following three points:
1) The use of ubiquitous data and breaking through traditional practices
2) Service strategies to respond to changing user expectations
3) Innovation-creating ecosystems and revision of internal rules

The second presentation, "Virtual Case Studies on Disruptive Forces," framed the technological changes and evolution witnessed since the 1970s as a new industrial revolution in a SoLoMo (social, local, and mobile) era. For the purposes of this discussion, the technologies driving disruptive innovation were categorized into three trend areas:
1) Analytic
2) Digital
3) Collaboration
Noted as common to these categories were that efforts to “respond to changing customer expectations” would drive innovation, which would be “led by firms willing to take risk.”

The subsequent lively roundtable discussion highlighted participant opinions including a range of expectations for “responding to changes the social environment,” “creating new frontiers in business,” and “shifting from continuous creation to discontinuous one.”

On the other hand, a number of factors that inhibit innovation were also mentioned, including the following: management placing priority on ROE, corporate culture that is averse to change, and enormous legacy assets. We learned two important things from some success stories introduced there: the effectiveness of initiatives by subsidiary firms which have a clear purpose and an unrelenting approach; and the importance of management that has taken innovation to heart and “made it part of the corporate DNA” to enable these initiatives to take root.

The scope of the discussion significantly transcended the prepared agenda, driving home the high expectations observers have and the vast potential see when it comes to financial innovation in Tokyo. Celent hopes that opportunities such as this that cut across the financial industry will act as a catalyst to drive the innovation at these respective firms.

Celent is committed to working with financial innovation leaders to explore the ideas that will shape financial industry of tomorrow. This discussion will be carried over and continued at events in March in Singapore and Chicago in April in New York. These will be followed by a June gathering in Tokyo that will focus further on innovation. We hope that you will continue to expect insightful things from Celent.

Tokyo Roundtable 2013: The Capital Markets Revolution in Japan and Asia

Tokyo, home to Asia’s largest capital markets, is also wonderful in May, and was a perfect location for two recent Celent roundtables.

The first was Exchange Panel: Drivers of Innovation and a Market in Transition. We invited Executives from five major global exchanges; CME Group, JPX Group, Korea Exchange, NYSE Euronext, and Singapore Exchange Limited. Representatives from both Asian and global exchanges discussed changing equities derivatives market structures, business models, challenges, and opportunities in Japan’s and Asia’s capital markets.

Though similar at first glance, the exchanges from the East and West presented a marked contrast. Asian exchanges insisted that competition, diversity, and deregulation are the keys to growth. Exchanges based in Europe and the United States said they found the diversity and competition excessive; they would prefer order and market discipline. All exchanges stressed the importance of innovation and collaboration, and all agreed the distinction between investment and speculation is important.

Such differences between East and West reflect the history of the global exchange business. Differences in time and distance are shrinking as networks grow, but, ironically, the advent of global capital markets has led investors to recognize the importance of individual trading venues.

For the second roundtable, The Capital Markets Revolution in Japan and Asia, we invited the top players. From online securities companies, Monex, Inc., from buy-side, Nissay Asset Management Corporation, and from sell-side, Nomura Securities Co., Ltd. This session focused on the emerging low latency landscape and the opportunities and challenges in the region’s equities and derivatives markets. In Japan and Asia, since the introduction of arrowhead, the latency has been lowered enough and the attention has shifted to its execution quality. Technologies such as Big Data and transaction cost analysis (TCA) are the focus of their challenges.

Finally, in response to questions from audience of the venue, we asked the panelist to comment on high frequency trading (HFT). There were two comments; one was “the opportunity to get everyone used to HFT is here”, and another “HFT is welcome in Japan”.

The market environment has changed drastically. Conversion of monetary policy, “Abenomics,” and the “three arrows” were a volcanic combination. Magma flowed, but all indicators began to rise.

FIG 1:Tokyo Equities Market last six months

Tokyo Roundtable 2013_GraphSource: NIKKEI, Celent
These discussions will continue in New York in June. Celent will continue to explore the market trends of tomorrow. We are looking forward to meeting you again.