Japanese FSA approves second experimental deal under "FinTech Experiment Hub"
Testing ways to streamline customer banking service
18 July 2019
The Japanese Financial Services Agency (JFSA) has been providing a framework "FinTech Experiment Hub" (FE Hub) since September 2017, which allows FinTech venture companies and financial institutions to test FinTech related new business tools before they are rolled out to the real world to identify the potential issues and regulatory requirements in using those technologies.
As part of the hub the JFSA provide a support team for clearance and compliance solutions and to clarify any ambiguity and interpretation and application of regulations for when such companies provide the tested services to the public in the future.
On 16 March 2018, as a second deal under the FE Hub, the JFSA approved the commencement of experiments by Dai Nippon Printing Co., Ltd. and The Nishi-Nippon City Bank, Ltd. regarding a know your customer (KYC) procedure utilizing facial recognition technology which makes it possible to issue bank cards immediately. Currently, a lot of paperwork is required at financial institutions for the identification of customers.
In Japan, one of the competent authorities regarding KYC and other anti-money laundering regulations is the National Police Agency (NPA) and the NPA will also be involved in such test under the FE Hub.
The first case treated under the FE Hub also related to the KYC process which was the testing of a shared KYC process among member financial institutions which allowed a member financial institution to utilize the record or history of past KYC processes conducted by other member financial institutions. It was approved by the JFSA on November 2017 and the test is scheduled to continue until March 2018.