Banks Embrace ‘Going Dutch’ For Open Banking

Under the Sakoku Edict of 1635, Japan closed its borders, isolated its economy, and attempted to create a protected and stable culture free from external influences. With the exception of limited trade with the Dutch East India Company and Chinese merchants through the port of Nagasaki, Japan was a closed economy and a closed society.

At the same time, the Dutch, despite a lack of natural resources and frequent political turbulence in Europe, were enjoying a Golden Age characterized by a rapidly growing economy, a cosmopolitan society that created some of the world’s great visual art, and a tolerant and open approach to ideas and religion.

For the past century, banks have been more like the Japanese of the 17thcentury than the Dutch. They’ve operated in a strongly vertically-integrated ecosystem, where they have frequently done everything from product origination all the way through to servicing. In addition, the banking industry has lived behind regulatory walls that have created meaningful barriers to entry. Banks have traded with each other, but in the way that Japanese villages would trade with each other. When it came to business ventures with non-banks, interaction has often felt like the constrained access that outsiders had to the 17th century Japanese economy.

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