Navigating Japan's Banking Culture
By: Zakari Watto | December 3, 2025
What Western FinTech Companies Don’t Understand About How Japan Does Business
Here's how it works. Western entrepreneurs in Japan often misunderstand things. This isn't because they lack intelligence. They apply their own logic within a unique value system. They may not even realize it.
Over the past decade and a half, I've witnessed Western businesses try to break into Japan's financial industry, and virtually all have failed because of their incorrect belief that advanced, well-priced products are sufficient for success.
Banking is a nerve-racking experience. It's about relationships, trust, and obligation. They know your situation, your family, your business. They have your situation, your family, your business. When you try to bypass them with your app, you're being disrespectful. You are being rude.
This is how Japanese banking works
In Western countries, banking operates as a transactional process where funds are moved between different places, requiring an optimal strategy that prioritizes speed and cost-effectiveness for superior results. The financial institution operates as a service provider. You are the customer, and you can leave if you find better service. This is your usual approach. In Japan, banking involves personal connections. Starting an account signifies you're establishing a bond. You are showing disrespect. The bank integrates into your monetary affairs, and where.
They know your situation, family, and understand your business. If you need to borrow money, they already know you. Banks don't need to run algorithms or pull credit scores to know whether you are trustworthy because they have been watching your account activity for years. This is normal for you. This is not inefficiency; it's intelligence.
I watched a colleague go to the bank to discuss a home loan. He didn't apply for a loan. Instead, approached the loan officer, his account manager of eight years, for a conversation. They were talking about his job, his family, and his plans for the house. The loan officer already knew all this, and the meeting was not meant to gather information. It's about relationships, trust, and obligation. Two weeks later, the loan was approved, not because of a credit score, but because the bank knew him.
This is how Japanese banking works. Upon arriving with your FinTech app, you might say, "We can transfer money in seconds rather than minutes."
Why Your App Does Not Convince Anyone, Even When It Is Better
You think your technology is better. But you're measuring “better” by Western metrics. You're thinking about the user interface, transaction speed, fees, and features. In Japan, “better” means more trustworthy, more stable, more integrated with how I already do business.
Here's an illustration: A Western FinTech company launched in Japan, offering quick money transfers and a user-friendly app. It was better by all Western standards. They are rarely managed by Japanese people, and none have succeeded. Japanese citizens usually go to their bank to transfer money internationally, speak to a contact, and let them manage it.
The application caused them anxiety; financial transactions are stressful experiences. They were worried about something going wrong. Whom would they contact? A support center overseas? They were familiar with who managed their issues at their bank. I contacted my branch manager. I have his personal line. He's aware of that.
The issue isn't technology; it's values. Japan has advanced technology. We’ve created robots for older adults. Bullet trains arrive on time. Vending machines make fresh coffee. The issue isn't technology; it's values. He knows them. We choose relationships over efficiency in banking.
The Real Problem You Are Not Seeing
Western FinTech enterprises don't grasp that Japan's risk-averse banking system is a conscious decision, not an unintended consequence.
Japan has experienced a financial crisis. We've lived through bank failures and understand what happens when systems become complex, disconnected, and risky. Our banking culture was built to focus on stability, not innovation. This was not localization; this was not laziness; this was wisdom learned through experience.
When you come with your model, you're asking Japanese customers to abandon something that protects them. You're asking them to trust a new system that hasn't been tested in a crisis, and most Japanese people will say no to that offer.
They say no politely. This is frustrating, and I'm not saying your idea is wrong. With polite smiles, they defer with "Perhaps another time," though the verdict is final; Japanese corporate etiquette demands indirect dismissal to maintain harmony, so you remain hopeful while the negative decision has already been reached.
How Decisions Get Made in Japan
This is critical for you to understand. Business decisions in Japan don't happen the way they do in your country.
When a large Japanese company opts to change its banking relationship or adopt a new financial service, it's not decided by one executive in a meeting. The decision flows through the organization. It goes to committees. It involves consultation with multiple departments. The accounting department must agree. An agreement is required from the finance department. Sign-off from the compliance team is mandatory, along with required agreement from the accounting department, finance department, compliance, and the CEO.
There's relationship capital at stake. If they've been banking with Sumitomo Mitsui for thirty years, that's not a transaction history; that's a relationship. It's intentional. The bank manager knows their company. He knows their business model and is watching them grow. If they switch to a FinTech startup, they're signaling that they no longer value that relationship. We are saying we no longer value that relationship. That damages things. In Japan, they weigh the damage and respond with a polite rejection.
The sales cycle is long, and he's familiar with their approach since they choose cautiously, using proper procedures and factoring in personal connections. While a Western FinTech business might complete a transaction in three months, the same transaction in Japan could take a year and a half. The procedure is fine, and everything is running smoothly.
Western salespeople lose their minds during this process. They deliver forceful follow-up correspondence, work to generate urgency, and compel the Japanese contact who respectfully turns down the offer, then launch aggressive next outreach, working to manufacture urgent pressure and hurry Japanese contacts into hasty judgments. Their voices have become overshadowed. This doesn't represent true localization. That's Japan's way of communicating, "You don't comprehend our business practices."
Companies succeed by understanding the rhythm. That's laziness. They give information and wait. They build relationships with people at the company, not just with the decision-makers. Acceptance of the time it takes is their approach. The decision is extensive. Companies that succeed recognize this. They are committed, and they won't switch again for six months.
The Generational Reality That Nobody Wants to Admit
I'll be honest with you. They're using both simultaneously. Younger people use LINE Pay, Rakuten Pay, and Google Pay. They always will. But don't misinterpret the Japanese answer.
They use digital payment apps because they integrate into their digital lives. They use digital payment apps because they integrate into their digital lives. If you're already using LINE to message friends, you can split a bill without leaving the app. It's laziness, and you still have a relationship with the bank. You still visit the branch sometimes. You still trust your bank manager, but use an app for small transactions.
This isn't FinTech adoption; it's the tools in the existing banking culture.
Don't confuse these things. Young Japanese people aren't waiting to switch to apps. They're using both, not what happens in Japan. They always will. Different solutions for different needs. It's not a replacement of the old with the new.
Western venture capitalists get frustrated by this reality. They want to see adoption curves like Western markets. Total replacement. While other places see old systems replaced by new ones, Japan maintains both simultaneously, using the traditional system alongside the new one for particular functions, with both remaining viable and profitable.
If you can't accept this reality, you'll waste years and millions of dollars trying to achieve something that won't happen.
What You Get Wrong About Trust
In the West, trust in financial systems comes from regulation and insurance. You trust your bank because FDIC insurance guarantees your money. You trust a FinTech app because it's licensed by regulators. Trust is institutional.
In Japan, trust is relational. I trust my bank because I know the people there. I trust them because they've shown me they care about my interests. I trust them because other people I know trust them. In Japan, trust is relational.
This is the reason for the Japan Financial Services Agency's guarded view on FinTech regulation. The FSA knows that getting approval isn't enough to build trust. You need a relationship, and you need to prove yourself over a period of time. You need customers to feel confident that real people are behind your system, not algorithms.
When a FinTech company gets FSA approval in Japan, that's important, but it's not transformative. But it is not transformative. It forms the opening stage, demanding trust cultivation, respect for Japan's cultural heritage, and evidence of your dedication to continuing presence over plotting a hasty retreat.
The companies that succeed recognize this. Companies succeed by understanding the rhythm of the hired customers. They hire Japanese people who understand the market, and they build customer service that serves customers, not automates responses. They create marketing that reflects Japanese values, not Western values. Patience is a quality they have. In the next five years, real growth will come from building genuine trust.
The Language and Design Problem That Kills Most Western FinTech in Japan
Most Western FinTech companies fail in Japanese localization. You don't translate your app into Japanese and call it localized. This isn't FinTech adoption; it's laziness.
When you design an app, you design it from your own logic. Your way of thinking about information is different in Japan. Your individual approach to data arrangement is one-of-a-kind. Converting to Japanese generates bewilderment. The system shows "Japanese" but operates with "Western" logic.
Real Japanese design is original. Organize information by importance and context. We choose simple over complex design and develop customer service interactions that work alongside, not instead of, human support when building apps for Japan. Do not treat it as an alternative.
I've seen FinTech apps that looked beautiful in English become confusing in Japanese. Customer service messages that were warm in English became cold and strange in Japanese. I've seen FinTech apps that looked beautiful in English become confusing in Japanese.
This is not a minor problem. This is not a minor problem.
Money Forward succeeded in Japan because it understood that Japanese customers think about accounting and taxes. Money Forward succeeded in Japan because it understood that Japanese customers think about accounting and taxes. They were designed with that difference from the beginning. Instead of taking American products and integrating Japanese features, they engineered solutions for the Japanese market.
You need to understand Japan at a deep level. Hire people who live here, who know how Japanese businesses think, who know what Japanese customers expect. This requires time and investment. It requires admitting that our Western solution isn't universal. It requires humility.
Most Western FinTech companies fail because they lack this humility. Most Western FinTech companies don't have this humility, so they fail
The company’s understanding of success
Japan remains a cash society. This is not a minor problem in Aomori; in rural prefectures, cash is still dominant.
Don't think this is backward thinking. Refrain from saying, "We need to educate people about digital payments."
Japanese individuals prefer cash because of the benefits unavailable with digital payments, such as privacy and independence from internet connectivity or mobile devices. For older people, who value privacy, and for people in areas with poor internet, cash is superior to digital payment.
Japan has built an extraordinary convenience store network. 7-Eleven, Family Mart, and Lawson are everywhere. These outlets are ubiquitous. You can settle payments, make deposits, and use financial services. FinTech infrastructure will handle this. It's a well-performing feature. It's not intended to replace corner stores.
A Western FinTech company comes and says, “We will cut the need to go to a convenience store.” Japanese people respond by asking, “Why would I want that?” The convenience store is already convenient. The FinTech app is not more convenient for me; it's less convenient.
FinTech in Japan doesn't aim to replace cash. It's not aiming to replace convenience stores or bank branches. Instead, FinTech in Japan creates services that work with these existing systems. Companies that understand this succeed.
What Success Looks Like in Japan
After fifteen years, I have seen what works. It's not what you think.
Japanese FinTech companies don't define success as rapid, dramatic growth. It's not about venture capital funding rounds or disruption. Success is the patient, steady adoption by specific customer segments who find value in your service. Triumph depended on forging relationships with Japanese banks and monetary institutions, concentrating on blending into the existing infrastructure rather than replacing it.
Rakuten Bank succeeded because it integrated with Rakuten’s broader ecosystem. You already use Rakuten for shopping. Your points and your banking become part of the same experience. Success is not disruption. This wasn't revolutionary.
LINE Pay succeeded because it is essential in Japanese daily life. People used it within an app they already used constantly. This wasn't revolutionary. Confrontation fails.
Western companies try to force change, but it doesn't work. When they recognize what's needed and build for it, success follows.
How to Succeed in Japan
To achieve success in Japan, you must employ individuals with market knowledge, and specifically those living locally rather than in New York, and following this approach will lead to your success.
Second, accept that growth will be slower than you expect. If you are used to Silicon Valley timelines, Japanese timelines will frustrate you. But patience pays off. Slow adoption is more profitable than fast growth followed by collapse.
Third, set up connections with financial organizations. Avoid antagonizing them and instead seek to join forces. Cooperation yields results, while conflict does not.
Fourth, understand what Japanese customers need. Listen to your market. Notice how people use financial services. Design for that reality, not for your fantasy.
Fifth, be patient with regulation. The Financial Services Agency is not trying to stop you. They're trying to make sure you're responsible. Work with them. Third, build relationships with financial institutions.
Sixth, design for Japan. Hire Japanese product managers. Use Japanese product managers. Hire Japanese designers. Design the entire experience for Japanese customers.
If you do not do these things, if you try to import your Western model and expect Japan to adapt, you will fail. Not because Japan is backward. Not because Japan is backward, but because you didn't respect Japan enough to understand it.
About the Author
Zakari Watto is a cross-cultural communication specialist and a Japanese native from Aomori with fifteen years of direct experience working between Japanese and Western business cultures. For over a decade, Zakari has guided Western FinTech companies, multinational corporations, and international entrepreneurs through successful market entry and sustainable operations in Japan. His expertise comes from living and working across Japan’s business landscape, from direct experience negotiating between Western FinTech startups and Japanese financial institutions, and from a deep understanding of how Japanese values, decision-making processes, and business culture function. Zakari speaks from the perspective of a Japanese person helping Westerners understand authentic Japanese business practices.
Get in Touch
Website: www.japaninsider.org Email: info@japaninsider.org LinkedIn: www.linkedin.com/company/JapanInsider.
Additional Resources and Bibliography
Japan Insider - Cross-Cultural Business Communication Guide (www.japaninsider.org/business-communication)
Understanding Japanese Banking Relationships (www.japaninsider.org/banking-culture)
FinTech Market Entry Strategy for Japan (www.japaninsider.org/FinTech-strategy)
Japan's Regulatory Environment for Financial Services (www.japaninsider.org/fsa-regulations)
Consumer Behavior: Digital Adoption in Japan (www.japaninsider.org/consumer-behavior)
External Resources and Citations 6. Financial Services Agency (FSA) - Payment Services Act Overview https://www.fsa.go.jp/en/news/2017/20170620_1.html
Bank of Japan - Financial Statistics and Market Analysis https://www.boj.or.jp/en/statistics/index.htm
Rakuten Inc. - Annual Report and Market Strategy https://www.global.rakuten.com/en/
LINE Financial Corp - Digital Payment Ecosystem in Japan https://www.linefinance.co.jp/
SBI Holdings - Fintech Innovation in Japanese Banking https://www.sbigroup.co.jp/english/
Japan External Trade Organization (JETRO) - Market Research https://www.jetro.go.jp/en/
McKinsey & Company - Digital Banking in Asia Pacific https://www.mckinsey.com/en/our-research
Boston Consulting Group - FinTech Trends in Japan https://www.bcg.com/en-us/publications
Deloitte - Japan Financial Services Industry Analysis https://www.deloitte.com/jp/en/
Reuters - Japanese Banking Sector Coverage https://www.reuters.com/finance/
Nikkei Asian Review - Japan’s FinTech Landscape https://asia.nikkei.com/
Japan Times - Business and Finance Section https://www.japantimes.co.jp/
Association of Japanese Banks - Industry Standards and Initiatives https://www.zenginkyo.or.jp/english/
Money Forward - Case Study in Japanese FinTech Success https://moneyforward.com/
Sony Bank - Partnership Model in Japanese Banking https://www.sonybank.net/
