Blockchain Transformation in Japan

This article is by Hiroki Morita, VP for Japan, SettleMint.

One of the interesting aspects of Blockchain Transformation in Japan is how it relates to the country’s attachment to the art of craftsmanship.

As business people are generally quite technically-minded, they want to see the concrete detail of how a blockchain-enabled solution works and to make sure everyone involved in the project understands it. To move forward, everyone needs to be on board, as no one wants to see a dividing line between the business people and the technical team.

This approach, which we encounter in all organizations, is worth highlighting because it aligns so well with the process of Blockchain Transformation, which we want to help all our clients embrace.

Blockchain Transformation is about connecting the dots between technology, people and processes to accelerate value creation with blockchain. It is not enough to simply adopt the technology; to make the most of it, you must focus on the people and processes involved, something we always feel fits perfectly with Japanese company culture.

Dirk De Ruyver, Matthew Van Niekerk, Roderick van der Veer and Shunichi Ko join Hiroki at the grand opening of SettleMint Japan, July 2023.

Blockchain adoption within Japanese organizations

Looking at how organizations consider blockchain in their technology roadmaps more generally, we can see that there is quite a wide variety of views. At one end of the spectrum, there are many companies that are still at the learning stage, trying to familiarize themselves with the benefits of the technology before they put any real effort into implementing a blockchain-enabled use case.

On the other end, those with high blockchain maturity who have already implemented the technology in at least a limited way, are very receptive to the idea of connecting technology, people and processes through a Blockchain Transformation approach.

In the middle are the companies that are excited about the value they can create with blockchain and want to get started. These organizations may already have a use case in mind, might have secured some budget and could have some in-house expertise to implement it. However, it is somewhat rare to have all three of these key ingredients in place and these blockchain enthusiasts can easily see their positivity wane as the obstacles to their progress mount up.

It is these organizations and the individuals within them, who usually hold a leadership role in Digital Transformation (DX) or Innovation, who can benefit most from Blockchain Transformation because it can help them accelerate the value creation they so want to achieve.

Blockchain use cases in the Japanese economy

In terms of what value creation looks like, there are opportunities across the full range of industry sectors that make up the Japanese economy. The first one worth mentioning is the financial sector, where asset tokenization is the most common topic of conversation.

One of the most interesting developments in this area during 2023 has been the greenlighting of asset-backed JPY stablecoins, as a result of the Crypto Asset and Stablecoin Framework that Japan’s FSA put in place over the summer.

These initiatives are the reserve of the country’s Trust Banks, who will be responsible for all of the custody, tokenization and distribution requirements involved in such a major project. No doubt these initiatives will take many months and possibly years to reach their full fruition and are perfectly suited to the holistic approach that Blockchain Transformation provides.

The other important sector where we see lots of interest in blockchain is manufacturing, with the most talked about use cases centering on supply chain tracking and the successful implementation of a circular economy. At a high level, these projects usually involve lots of different stakeholders joining a consortium network to share production, leasing and transportation information in a secure, transparent and efficient way.

It’s therefore fair to conclude that the blockchain market in Japan is not hugely different from other regions around the world, and this is why we believe the message of Blockchain Transformation has so much potential to embed itself within company culture here too.

Hiroki, Nandan and Kenji of SettleMint Japan, together at the global 'Offsite' in October 2023.

Blockchain opportunities in Japan

Blockchain is still something of a greenfield opportunity in Japan and this is something that technology partners would do well to take note of at this stage. After all, it’s not just an opportunity for enterprises to seize but also one for the major Japanese technology companies.

These companies already have established offers focused on core systems, such as mainframes and ERP systems, which are unlikely to change or drive significant growth in the future. Blockchain provides an opportunity for them to expand into an emerging technology market, something that we are well-placed to help them deliver.

That’s because of the connection between technology, people and processes that sits at the heart of Blockchain Transformation. We have plenty of experience training different business and technology teams in all aspects of blockchain within major enterprises across Asia and the world, and this is something we are always open to speaking to new partners about.

The benefits of doing so go beyond just being able to build blockchains for existing customers. There is also a huge amount of related work to be done, from ID management to front-end development and integrations with existing systems, that a partnership with SettleMint can bring to any potential partners interested in the Blockchain Transformation approach.

The people I speak to in Japan like to deal in concrete terms, so it seems appropriate to finish with the specific benefits I believe Blockchain Transformation can bring to enterprises across the country.

Blockchain Transformation is about ensuring your blockchain project succeeds because it avoids the pitfalls that research shows have caused 85% of blockchain projects to fail in the past. It’s about creating value for your organization by implementing blockchain in a way that identifies a clear return on investment from the start and accelerates the process of reaching this important target.

In Japan, where everyone wants to fully understand the details before moving forward, Blockchain Transformation provides clear benefits for all to see.