（Original article in Japanese was published for FinTech Journal on Jan. 6, 2025）
https://www.sbbit.jp/article/fj/154120

What are the 10 major trends for 2025?（Photo/Shutterstock.com）

As 2025 approaches, marking a quarter-century since the beginning of the 21st century, it is set to be a milestone year for Japan in many ways. This article will first explain some of the symbolic aspects that have been pointed out in previous discussions. Following that, we will explore 10 key trends, including the expansion of financial DX, the practical application and advancement of generative AI, the progress of cashless payments, new developments in BaaS, the implementation of digital currencies, the diversification of digital securities, the personalization of insurance, the expansion of services for SMEs, and the further increase in online financial crimes.

The 2025 Problem: Super-Aging Society

By 2025, one in five Japanese citizens will be 75 or older, increasing demand for pensions, healthcare, and financial services for the elderly while exacerbating labor shortages.

The 2025 Digital Cliff: Delayed Digital Transformation (DX)

Japanese companies must accelerate DX efforts to remain competitive. Legacy systems, IT talent shortages, and security risks pose challenges, with estimated annual economic losses of ¥12 trillion if DX stagnates.

My Number 2025 Issue: Electronic Certificate Renewal

Japan’s National ID, My Number Card system will require the renewal of 27 million electronic certificates in 2025 before the renewal of physical cards, raising concerns about disruptions in access to healthcare and other services. 

With 2025 marking such a critical transition year, the following paragraphs will explore 10 key fintech trends that are expected to play a significant role in shaping the industry.

1. Expansion of Financial DX

The financial industry is shifting from process digitization to full operational restructuring. This includes AI adoption, talent reskilling, and fundamental changes in banking and insurance sales.

2. Generative AI in Finance

AI is evolving from automating tasks to acting as an autonomous financial agent. AI-driven “machine workers” may replace human customer service, and “machine customers” could conduct financial transactions independently.

3. A “World with Interest Rates”

Japan’s exit from zero-interest rates is reshaping financial strategies. Banks are strengthening deposit acquisition, and fintech firms are exploring new revenue models. Risk management solutions are becoming critical to prepare for the further interest rise.

4. Progress of Cashless Payments

Japan’s cashless payment ratio reached 39.3% in 2023, nearing its 40% target for 2025. Expansion efforts now focus on businesses and inbound tourism, with QR code payment standardization and international partnerships (e.g., PayPay & Ant Group).

5. New Developments in BaaS (Banking as a Service)

BaaS adoption is evolving beyond embedded finance. Examples include digital banks partnering with energy and crypto firms to create new financial products. More innovation is expected in 2025.

6. Implementation of Digital Currencies

Japan is exploring CBDCs alongside global central banks, though no immediate launch is planned. Stablecoins and deposit tokens are gaining traction, with increasing real-world use cases.

7. Diversification of Digital Securities

The market for blockchain-based digital securities is growing, expanding beyond real estate into green bonds and entertainment financing. Asset-backed digital tokens are expected to gain popularity.

8. Personalized Insurance (Insurtech)

AI-driven data analysis enables more customized insurance offerings, such as wellness programs and employee benefits linked to health metrics from wearable devices.

9. Expansion of SME Financial Services

New fintech solutions cater to small businesses, including alternative lending models and digital accounting services to improve SME financial inclusion.

10. Rise in Online Financial Crimes

With digital finance expanding, cyber threats such as fraud and hacking are increasing. Stronger security measures and AI-based fraud detection are becoming essential to cope with tech-savvy fraudsters.

Conclusion

Japan faces significant challenges, including a declining workforce, making it imperative to improve efficiency across society. In the financial sector, expectations for emerging technology—especially generative AI—are high. 2025 is likely to be a critical year for fintech, as its true capabilities will be tested in addressing these pressing issues.