Japan readies legislation for drones and driverless cars

In an effort to ignite its flagging commercial sector, Japan is looking to introduce legislation for the commercial use of delivery drones and driverless cars and other fintech features. The new rules will enable the use of drones for delivering consumer goods by 2020 and driverless vehicles for commercial use by 2022. In addition, Japanese lawmakers are also looking to encourage greater use of big data and artificial intelligence, particularly in respect of diagnosing medical conditions. According to Reuters, these plans will be unveiled on 9 June. Reuters also quoted a source as saying: “The priorities are improving life expectancy, revolutionising transport, modernising supply chains, improving infrastructure and using financial technology.” The government is also planning to launch a regulatory sandbox for fintech and insurtech features, a common strategy employed by international supervisors to encourage commercial innovation by allowing companies to test new products without the restraint of full regulation. Japan has a particular need for drones and autonomous vehicles due to a shrinking workforce. In April, Yamamoto Holdings, Japan’s largest delivery company and responsible for shipping one in every two parcels, announced that it would be forced to cut delivery volumes yet increase prices due to a lack of workers. In addition to a depleted workforce, Japan is also lagging behind its Asian neighbours in the development of fintech and insurtech. Although the number of startups is growing year on year, the growth is still a long way behind its neighbours. Singapore and Hong Kong have emerged as the region’s leaders in terms of fintech and insurtech, while Indonesia and South Korea are currently in talks to collaborate on fintech projects. Meanwhile in Japan, investment in the sector was just 0.4% of overall investment in 2014, and although it doubled in 2015, the total only amounted to $142m. A strong bank branch culture has been cited as a reason for the slow growth of its fintech market – in contrast to the likes of India and China where the high number of ‘unbanked’ has been a spur for greater innovation in financial services. Japan has also trailed its neighbours in the use or exploration of other fintech staples – distributed ledger or blockchain technology and cryptocurrencies. The country’s central bank, the Bank of Japan, launched a blockchain test drive in December 2016 to gather more information on the technology. The bank’s governor Haruhiko Kuroda has referred to the significant change and impact on financial services that could be created by blockchain technology, although his deputy Hiroshi Nakaso added that there are currently no plans to use digital currencies as a replacement for traditional cash. This reluctance could be related to the 2014 collapse of one of the first bitcoin exchanges, the Tokyo-based Mt Gox, after more than 850,000 of customers’ bitcoins were stolen during a four-year period. The signs are slightly more positive for insurtech, given that Japanese insurer Sompo was the latest big investor in insurtech startup Trov, which offers on-demand house insurance via a smartphone app and is also planning to launch next in Japan with Sompo as its underwriting partner, a year after launching in Australia and the UK.

Japan readies legislation for drones and driverless cars

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