# New Products and Services in the IoT Era

Part 1

Chapter 3 looks into ICT devices and services that will emerge in the IoT era from the standpoint of consumers as users and ordinary citizens.

## Section 1 New Services in the IoT Era

Two significant global trends in services are FinTech — innovative financial services that rely on ICT — and the sharing economy — services where individuals lend or rent their idle assets to others over the Internet. While each of these services and devices have their own circumstances and factors, there are commonalities as well. One is the digital revolution, in which technological innovation has boosted computing power exponentially and dramatically lowered communications costs and information processing costs. Another commonality is the

### 1. FinTech

## (1) Background to the current focus on FinTech

FinTech is a portmanteau coined from finance and technology. Investments in the FinTech field have shot up in recent years. The background to this, in addition to ongoing innovation and growth of ICT technologies, was the displacement in human resources in the United States after the 2008 global financial crisis. After this time, enterprises from other fields were seen entering payment services business and loan businesses. More importantly, particularly in the West, was the trend for existing financial institutions to partner or collaborate with Internet enterprises in order to harness innovation from the information and communications sector.

The trend toward partnerships and collaborations in this area has the potential to create new values, and it is probably 1 factor elevating hopes and investments in FinTech. In Japan, a bill to Partially Amend the Banking Act and Related Laws to Address ICT Progress and Other Banking Environment Changes was passed in May 2016 to address the landscape changes in the financial sector, particularly the deployment of ICT. One of the resulting amendments to the Banking Act is the possibility for banks to invest in business firms beyond the previous 5 percent cap, with the approval of the banking regulator, in cases where the use of ICT or other technologies will enhance the functionality of banking or improve user convenience. Amendments to the Payment Services Act include the creation of a registration system for operators of exchange businesses between virtual currencies and legal currencies and of regulations to protect users of such exchanges. And the Act on Prevention of Transfer of Criminal Proceeds was amended.

inherent nature of digital that makes it easy to divide up tasks or combine tasks through the use of APIs that ensure interoperability or interconnectivity. There are four discrete events behind these: (1) the evolution of ICT, such as the prevalence of smartphones, social media, and cloud services — specifically, the ability for anyone at anytime from anyplace to connect to the Internet; (2) the growth in ICT use in non-ICT industries; (3) the massive growth in data available for analytic tasks; and (4) advances in data analysis technologies.

to oblige banks to confirm the identity of customers.

## (2) Examples of FinTech

### a. Payments and remittances

Businesses providing payment and remittance services can be divided into 3 camps: companies like PayPal that primarily provide payment services; companies like Apple and Google that provide payment services connected to mobile businesses; and companies like Coiney and Square that use ICT efficiencies to lower the service fees for credit card payments that have been a barrier to entry for SMEs and owner-operated businesses. New payment methods are being introduced in emerging countries, such as non-cash payment services provided by Alipay and the Vietnam Post.

### b. Asset management

Asset management services are another example of FinTech. For example, Money Forward is an app for individuals to create household account books, and free is a cloud-based accounting software package for SMEs. Both are distinctive because they use cloud services and greatly automate the work of creating account books and accounting by connecting their own services with other companies' services, with the consent of the user. And both services are kept inexpensive: Money Forward's premium membership is 500 yen a month, and free costs 980 yen a month.

In particular, the use of free by SMEs or owner-operator businesses can make accounting processing more efficient, leaving more time for core operations and creative work. Such services are expected to promote busi-