Japan Kicks Off Reiwa Era's Payment Infrastructure - Part 1: Zengin

In November 2018, the Japanese Bankers Association and Zengin Net launched a new platform—the so-called “more time system.” This extends the operation hours of the Zengin System, the backbone of the nation’s bank payment infrastructure, extending the service hours of financial services related to fund transfers. As a result, together the existing and new system will enable round-the-clock operations 365 days a year, making it possible to confirm the receipt of funds from other banks in real time.

In addition, the Zengin EDI System (ZEDI) migrated in December 2018 to XML-formatted electronic message usage, the international standard for electronic financial transactions between companies. This financial EDI platform makes it possible to attach commercial information to domestic fund transfers. This new EDI platform and extended operating hours have advanced Japan’s payment infrastructure and ushered it into a new era.

The latest iterations and development of the Zengin System are responses to a prominent FinTech and digitalisation trends in the financial industry. The new architecture of the Zengin System marks an evolution beyond merely the business of recording financial information related to the financial industry but rather signals an attempt to extend operations to the business of mediating and enabling customer relationships with a focus on financial services.

Celent has put together a conceptual framework forecasting the future of financial services that will emerge as these current trends play out. The conceptual system presumably will be used not only by financial institutions, but will become a platform to realise open innovation that is shared by the manufacturing, retail, and sales industries. In practice this should extend beyond B2B commercial information to include and make distributable non-financial information such as B2C, consumer lifestyle-related information that should be distributable through API (application programming interface).

The future landscape of financial services will look very different from that of today. It will be less exclusive and special, and more approachable with a flatter playing field involving more participants. A fusion of corporate activities and consumption activities will continue as will the blurring of the lines between information and activities that extend beyond things financial.

FinTech will heighten the expectations of financial service users. In tandem with that, the Zengin System is seen evolving to meet those expectations as a new financial service platform offering both robustness and convenience. The financial industry should harness this payment infrastructure as an open innovation platform to realise its full potential and not limit its application solely to meeting the demands of consumers and industry. The extended operation hours and financial EDI initiative present an opportunity to create innovative financial services.