FinTech to Realize Super-Smart Society: Society 5 · 2018-03-06 · through the technical innovation such as AI, IoT, Robotics and such ... FinTech as a key component for Social Innovation

© Hitachi, Ltd. 2018. All rights reserved.

FinTech to Realize Super-Smart Society: Society 5.0

February 20, 2018

Toshiya ChoSenior Vice PresidentHead of Financial Innovation CenterHitachi, Ltd.

Prepared for ICTA/CICC Joint Seminar


1. What Is Society 5.0?2. Hitachi's Solution Areas for FinTech3. How FinTech Will Contribute to Society 5.0

and Key Technologies

Contents


1. What Is Society 5.0?

© Hitachi, Ltd. 2018. All rights reserved. 3

GermanyIndustrie4.0

China

中国製造2025(Made in China 2025)

USAIndustrial Internet

Japan has conceived Society 5.0 equivalent to and/or exceling other countries’ concepts

How Is Society 5.0 Conceived?

World is witnessing the digitalization of industries and social infrastructurethrough the technical innovation such as AI, IoT, Robotics and such.Germany, USA and other countries created new industrial conceptconsidering the progress of the digitalization.


What Is Society 5.0?

Progress of Society Definition of Society 5.0

Social Phase Tool /Technology

Stone Tools

1. By realizing the advanced fusion ofcyber space and physical space,

2. And by providing goods and servicesthat granularly address manifold latentneeds, to balance economicadvancement with the resolution ofsocial problems,

3. To bring a human-centered society inwhich people can lead high-quality livesfull of comfort and vitality.

Irrigation

SteamEngine

Computer

AI, IoT,Robots,

etc.５.０ Super-Smart

Society

４.０

３.０

２.０

１.０

InformationSociety

IndustrialSociety

AgriculturalSociety

HuntingSociety

Cyber Space

Physical Space

UtilizeCollect

Source: Cabinet Office


５.FinTech

１.Extension of

Healthy Lifespan

２.Mobility

Revolution

３.Next-

Generation Supply Chain

４.Pleasant

Infrastructure and Towns

Growth Strategy 2017 – To Realize Society 5.0

Growth Strategy 2017 (released on June 9, 2017) shows 5 strategic areasand specific measures to realize Society 5.0.

Strategic Focus for Society 5.0

Specific Measures for Society 5.0ü Data utilization infrastructure and legal measures for data distributionü Introduction of regulatory sandbox to enable policy making based on PoCs.ü Promoting industry-academia cooperation and R&D to establish ecosystem

for innovation and venturesü Work styles to improve productivity and enhance creation of new values

etc.


2. Hitachi's Solution Areas for FinTech


Major FinTech Business Areas for Hitachi

OtherIndustries

FinTech Firms

LinkLink

Open API* enables new services connecting FSIs with FinTech firms and other industries.

1. InterfaceWider usage of Biometrics enables services with higher security and more convenience.

2. Security / Authentication

Big data analytics and AI enable higheroperational efficiency and new product /service development.

3. Big Data / AIBlockchain is expected to bring huge impact on various industries not limited to finance.

4. Financial Infrastructure

FinancialTransactions

Channels

Financial Service Institutions(FSIs)

Security / Authentication3

Big Data / AI

Financial Infrastructure (Blockchain)

Interface

Interface

ServicesCustomers (Retail / Corporate)

Hitachi defines Society 5.0 as the society where multiple industries areinterconnected and focuses on 4 areas of technology in FinTech to realizeSociety 5.0.

PFM**

Settlement / Remittance

Cloud Accounting

Robo-advisorDigital Currency

Transaction Lending

*API: Application Programming Interfaces**PFM: Personal Financial Management


3. How FinTech Will Contribute to Society 5.0and Key Technologies


Link via Smart Contract / APIService/Function

LoanAssetMgt.

Finance

SupplierBuyer

Supply Chain Mgt.

(SCM)Distribution・Retail

Settle-ment

Payment

Shipment

P/O

SettlementAcceptanceShipmentP/O

Insu-rance

Cross Industrial Services by Open API / Blockchain

The wave of digitalization in various industries is expected to enable a businessmodel transformation to interconnect industries and solve various socialproblems, as an outcome of Society 5.0. Open API and Blockchain, especiallyits Smart Contract functionality, are supposed to bring new businessopportunities by streamlining business processes and information sharing amongindustries.

Auto-mobile

Life-log

HospitalRecords

Lifelog

Tax

RealEstate

Vote PublicService

Healthcare

How FinTech Will Contribute to Society 5.0


Open API：Legal / Regulatory Situation in Japan

TargetsImprove

User Interface and Security

Improve User Interface and Security

1Innovation of

Financial SystemInnovation of

Financial System

2Interface with

Settlement ServiceInterface with

Settlement Service

3

Discussion and examination by experts from public and private sectorsregarding regulations, standardization and safety measures are in progress.

Financial Services AgencyAmendment in Banking Act (as of June 2, 2017)

－Bank are obliged to open API－Mandate registration to FinTech companies

Japanese Bankers AssociationProduce and publish a checklist for Open API (June. 2017)

Ministry of Economy, Trade and IndustryReview issues and risks for new services using open API. Plans to produce guidelines.


API: Benefits by Opening and Using APIs

DispatcherService

Example: Dispatcher Service

Location Call/SNS SettlementAPI API API

Hotels

API

Restaurants Airlines

Driver User

Matching

Use

Open

■Benefits to Use APICost Reduction, Risk Mitigation

and Faster Service ReleasesBy using external services available via

API, it is possible to deliver services more quickly and reduce initial cost.

■Benefits to Open APINew Customer Acquisition

Approach to new customer segments via external services

New Service DeliveryUsing data via external services for marketing and new service planning.


Blockchain SystemTraditional System

DistributedLedger

Reliable and independent organizationsshould offer assurance for transactions.

Participants mutually agree and approvetransfer records of value.

TamperProof by Digital

Signature

Trans-parent

High LevelSecurity System

CentralizedControl

Features• Decentralized Architecture• No Necessity to Trust Particular Individuals or Organizations• Low Risk of Data Loss through Node Failure• Virtually Impossible to Falsify Existing Data

Blockchain is expected to bring dynamic changes in financial services and infrastructure as well as IT structures and operations in other industries.

What Is Blockchain?


Hyperledger: Open Innovation in Blockchain

Hyperledger is an open source collaborative effort created to advance cross-industryblockchain technologies. It is a global collaboration, hosted by the Linux Foundationwith more than 180 organizational participants. Hitachi is a founding premier memberof Hyperledger and makes a significant contribution to the development.

(As of February 1, 2018. Each logo is a registered trademark of each company.)


Expansion of Blockchain Application

Blockchain allows multiple parties to securely interact with the sameuniversal source of truth. Starting from financial industry, areas ofapplication are expanding to other industries.

Ø Streamlined Settlement

Ø Improved Liquidity, Ø Increased

TransparencyØ New Products/Markets

FinanceØ Unite Disparate

ProcessesØ Increase Data Flow

And LiquidityØ Reduce CostsØ Improve Patient

Experience And Outcomes

HealthcareØ Track Parts And Service

ProvenanceØ Ensure Authenticity Of

GoodsØ Block CounterfeitsØ Reduce Conflicts

Supply Chain

Source: Linux Foundation with additions and modifications by Hitachi.


New Services Using Blockchain (Illustrative)

Existing System ＋ AI ＋ Blockchain = New Services

Qualification AmountCalculation

Loan Offer /Transactions

- EDI Information- Traceability Information

EDI Database

Planning

Distribution

Production

Accounting …

EDI：Electronic Data Interchange

For instance, combining existing EDI(*) service with blockchain and AI,new service opportunities and functionality will be expanded.

EDI Service(Blockchain)

FSIs

Suppliers(SMEs)Buyer

SettlementAcceptanceShipmentP/O

Transaction linkedwith EDI can bemonitored with thelatest status in thebusiness stream usingblockchain.

TraceabilityManagement

Based on theinformation on thesupply chain, banks canoffer loan along with AIbased qualification in aflexible and dynamicmanner.

TransactionLending

AI


Blockchain Demonstration


Summary: Our Concept for FinTech／Society 5.0

• Hitachi will contribute to the realization of Society 5.0 consideringFinTech as a key component for Social Innovation Business.

• Society 5.0 is a society where new values are deliveredthgough multi/cross-industrial collaboration, and Open APIand Blockchain are the key technologies for Society 5.0.

Society 5.0

API

API API

API

API

Blockchain


Toshiya ChoSenior Vice PresidentHead of Financial Innovation CenterHitachi, Ltd.

FinTech to Realize Super-smart Society: Society 5.0

February 20, 2018

END

Documents

FinTech to Realize Super-Smart Society: Society 5 · 2018-03-06 · through the technical innovation such as AI, IoT, Robotics and such ... FinTech as a key component for Social Innovation