telecommunications, media, transport, and electronic commerce and internet business firms who are managing touchpoints with a large - scale customer base. conversely, there are also financial institutions that actively adopt services of fintech providers. as for fintech as a service — the theme of this year ’ s fin / sum — there are cases where financial institutions utilize the advanced electronic know - your - customer ( e - kyc ) and fraud detection services of fintech providers in their applications. there is also a recent trend toward unbundling financial services that financial institutions used to provide as tightly coupled, thereby enabling componentized financial services to be combined with services of non - financial firms. this is referred to as “ banking as a service ” ( baas ), also known as embedded finance. it allows, for example, consumer firms issuing discount coupons 1 / 3 bis central bankers'speeches or providing loyalty points on their applications to enhance the usability of the coupons or points by plugging in cashless payment services provided as baas to their applications. there are also non - financial firms that seek to improve customer convenience and customer marketing by providing banking services under their own brands together with their businesses through baas. integrating information and financial systems in this way, a broad range of enterprises and entrepreneurs is creating new businesses through neue kombination ( new combinations ). the term neue kombination was originally introduced by schumpeter in his book the theory of economic development, and it was later interpreted as describing innovation. according to schumpeter, innovation is not necessarily about invention but is more about creating or changing combinations. needless to say, it is digitalization in various fields that is currently accelerating the creation of neue kombination. neue kombination 2. 0, brought about by digitalization, is reinforced by linking what were traditionally two separate systems : ( 1 ) the information systems assisting people ’ s livelihoods and business activities and ( 2 ) the systems supporting financial services. for example, most economic activities involve payments as financial activities. while commercial data such as billing and payments have been leveraged to improve the business efficiency of a supply chain, they have not been shared with financial services. this means that neue kombination, or innovation, could occur if the matching of commercial and payment data is enabled by linking commercial systems and payment services. for example, large volumes of invoice receipts could be automatically matched with payment records, thereby improving business efficiency, and potentially enabling real

bank of japan ’ s september report of recent economic and financial developments bank of japan communication, 11 / 9 / 98. the bank ’ s view japan ’ s economic conditions continue to deteriorate. with respect to final demand, public investment seems to have bottomed out. net exports ( exports minus imports ) are increasing mainly due to a decline in imports. however, business fixed investment has been decreasing significantly, and housing investment has declined further. private consumption has not yet shown a recovery despite the special income tax reduction. against this background of weak final demand, production has been reduced substantially. as a result, some industries have shown improvements in inventory adjustments, but the level of inventories is still high as a whole. with the decline in expenditure and production, corporate profits continue to decrease, and the decline of employee income is accelerating somewhat. in addition, the ratio of job offers to applications records a historically low level, and the unemployment rate remains at a high level. as a whole, the employment and income conditions have deteriorated further. as the above indicates, there are continued negative interactions of production, income, and expenditure. given the current considerably low level of economic activities, the economy is unlikely to transit immediately to a self - sustained recovery led by private demand, although a further deterioration in the economy is expected to cease gradually from the effects of the comprehensive economic stimulus package. additionally, attention should be paid to possible negative effects on the real economy from financial developments including the recent fall in stock prices. in these circumstances, the cabinet approved a guideline on budget requests by ministries for fiscal 1999. this guideline intends to stimulate the economy by allocating ¥4 trillion to the special budgetary provision on the condition that the fiscal structural reform act is suspended. in addition, the bills to rebuild the stability of the financial system are being deliberated at the diet, and the reduction exceeding ¥6 trillion in personal income taxes and corporate taxes is expected to be discussed in detail. the materialization of these policies along with their effects on corporate and household sentiment should be carefully monitored. with regard to prices, wholesale prices are on a downtrend, and consumer prices are lowering below the previous year ’ s level. with respect to the outlook, the downward pressure from domestic factors is unlikely to weaken considerably reflecting the already large output gap, despite the expected effects of the comprehensive economic stimulus package. hence, prices are likely to be weak for some time. in the financial markets, stock prices dropped considerably in late august