TOKYO -- Former Bank of Japan officials are in high demand throughout the country's financial industry, including banks and brokerages, as well as academia. Their expertise and experience are big assets for their new employers.
The BOJ, on the other hand, faces a serious brain drain, especially in cutting-edge areas like fintech.
Junichi Kanda, a 47-year-old former BOJ official, now works for Japanese startup Money Forward, which made its initial public offering on Sept. 29. Kanda is in charge of business development and external affairs at the fintech-related venture.
Kanda had his first experience with fintech when he was seconded to the Financial Services Agency two years ago, calling the development of the new technology a turning point for Japan's financial industry. He said he was excited to be engaged in fintech policy at the Japan's financial regulator.
But Kanda knew that he would not be able to continue to be associated with fintech when he returned to the BOJ. He liked the idea of signing on with a startup, but his wife was skeptical. So he stayed up all night for two consecutive days writing a 16-page report to persuade his wife it was the right move. The effort paid off -- he joined Money Forward in September.
Best and brightest
Naoyuki Iwashita is another former BOJ official who is a leading expert on fintech in Japan. He joined the faculty at Kyoto University in April after having served as the first head of the bank's FinTech Center. Now he works as an adviser on fintech to the private sector.
The BOJ boasts some of the field's best and the brightest. Hiromi Yamaoka, head of the BOJ's payment and settlement systems department, said the bank is keeping pace with the world's best when it comes to fintech. The bank is doing trials on blockchain, a type of distributed record keeping, together with the European Central Bank, and doing research on financial applications for artificial intelligence.
Still, it will not be easy for the central bank to compete in high tech. "It is vital that financial institutions, IT companies, public authorities and other entities closely cooperate in order to deepen their understanding about new developments, and ensure that innovation leads to welfare enhancement," said BOJ Gov. Haruhiko Kuroda in a speech on Wednesday.
Because fintech is a new industry that operates outside the scope of traditional finance, it is likely to continue sucking up a vast amount of talent.
Yamaoka sees Singapore as the world's leading fintech powerhouse. The Monetary Authority of Singapore, the country's central bank, plays a big role in fostering the industry there.
Singapore is also actively investing in startups, and fintech events attract large crowds. The city-state boasts a highly flexible labor market that attracts skilled professionals from around the world in many fields. Fintech is no exception.
"The next 12 months will be very important for Japan's fintech industry," Kanda said. "If we lag behind our competitors by one year, the world will be completely different."
A war for talent has broken out as technology advances. Fintech is just the latest front in this battle for Japan's central bank.