Watch this series examining top tips from leading innovators in the financial industry on how to make innovation a success. This week: Interview with Eiichi Kashiwagi, Bank of Tokyo-Mitsubishi UFJ.
Japan experienced somewhat of a FinTech boom in 2015, with financial technology becoming the focus of Japanese media and government agencies alike, followed by large institutions setting up dedicated departments around innovation. “The FinTech movement originally began around the retail area, especially in payments. But now we are seeing FinTech players coming out in the wholesale market, particularly in areas such as blockchain or artificial intelligence (AI). These new technologies may have a big impact on how we serve our wholesale customers,” says Eiichi Kashiwagi, General Manager of the Digital Innovation Division at the Bank of Tokyo-Mitsubishi UFJ (BTMU).
Instead of being afraid of the challenge and failure, be afraid of avoiding the challenge and doing nothing.
BTMU feels it is important to address digital transformation, in terms of how their customers will adapt digital technology to their business processes, and how business models will be created in turn. BTMU is poised to transform its own business using digital capabilities accordingly. A dedicated innovation department emphasising the importance of innovation has existed at BTMU for more than 15 years, albeit with different titles such as ‘ECommerce Division’ and ‘EBusiness and IT Initiatives Division’.
BTMU follows a basic innovation cycle incorporating stages of research, evaluation, proof of concept trials, development and release. The Digital Innovation Division focuses on ‘open innovation’ and ‘global innovation’. ‘Open innovation’ emphasises the necessary communication with people outside of the organisation to promote innovation, for example, dealing with different hackathons, acceleration programmes and FinTech startups. The ‘global innovation’ approach sends members to other parts of the world, such as Silicon Valley in the U.S., to identify new emerging technology and FinTech startups.
I think it is quite important not to get carried away with the FinTech boom, but to emphasise the importance of a steady innovation, making efforts step-by-step.
In order to innovate within a large firm, Kashiwagi recommends having the IT and business sides of the institution build a centre of excellence so as to successfully carry out innovation. In terms of funding innovation, it is important to have an R&D budget that is not tied to short-term return on investment, as well as having a short decision-making cycle when dealing with FinTech players.
Likewise, BTMU recognises the importance of collaborating with outsiders as it is not possible for one organisation to do everything by itself. “Oftentimes in the wholesale area it is necessary to find a pilot customer to carry out innovation efforts. It is essential to work together with these customers in order to create innovation since many of them have to deal with their own legacy systems. If we went out and simply built something by ourselves, we would run the risk of it not fitting the needs of these customers,” explains Kashiwagi.
Read related interviews:
- Sebastien Nunes, Head of Innovation and FinTech, BNP Paribas Securities Services
- Scarlett Sieber, Senior Vice President and Head of New Digital Businesses, BBVA
- Nigel Dobson, General Manager of Transformation Projects, ANZ
- Claire Calmejane, Director of Innovation & Digital Centre of Excellence, Lloyds Banking Group
- Saket Sharma, Head of Treasury Services Technology, BNY Mellon
- Genevieve Douhet, Associate Director, Group Innovation Department, Societe Generale
- Rob Palatnick, Managing Director and Chief Technology Architect at the Depository Trust & Clearing Corporation (DTCC)
- Christophe Chazot, Head of Innovation, HSBC
- Tim Bosco, Senior Vice President at BBH
- Angus Scott, Director, Product Strategy and Innovation, Euroclear