New Personal Information Protection Act generates areas for revenue

Japan’s Personal Information Protection Act that took effect April 1, 2005 is generating sources of revenue for a handful of American data security companies helping Japanese firms comply with the new regulations. The law requires organizations and companies to bolster the security measures for data transfers and data access methods, in turn generating demand for information security companies. Furthermore, the amount of data transferred as a result of increasing online transactions and the growth of transactions expected from banking terminals soon to be offered at non-financial establishments across Japan present a sea of new business opportunities for data security companies.

The new Act requires protecting personal information against leaks and other internal risks as well as external attacks. To help Japanese companies and organizations protect the focus of such attacks—the databases—several American companies are already supplying their security tools to help protect valuable information while adding to their overseas revenues.

• Verdasys Inc., a Massachusetts-based provider of “complete data security” solutions, sold its Digital Guardian software to the City Government of Fujisawa, Japan to safeguard data contained on PCs, laptops and servers distributed throughout government offices. The City will also monitor, control and audit the capabilities given to users who handle sensitive data.
• Based out of San Jose, CA, IPLocks Inc. provides IIJ Technology Inc. of Japan (IIJ-Tech) with a database security tool that monitors database integrity and access integrity. IPLocks’ technology serves as an integral part of IIJ-Tech’s new Integration and Business Platform (IBPS) Database Security Assessment Service, which helps assess the vulnerability of corporate databases.
• Ingrian Networks Inc. of Redwood City, CA signed an exclusive distribution agreement with Macnica Networks Corp. of Japan to offer Japanese companies better encrypting solutions. Ingrian CEO Robert Steinkrauss was quoted in a company press release saying, “Given the trends in motion in Japan, it’s clear that there’s a tremendous demand for our solutions in that region.”

One such trend is an increasing number of Japanese who find it cheaper and easier to trade online. To target this group, a series of partnerships have formed between online financial services: Shinsei Bank and Rakuten Inc.’s securities arm in November of last year, Yahoo Japan Corp. and Aozora Bank announced in January, and in the latest of such partnerships, Sumitomo Trust & Banking, Japan’s fifth largest lender, agreed to form an online banking joint venture with SBI Holdings, an Internet financial firm.

In addition to online services, Japanese banks are placing greater focus on expanding their in-person retail banking operations. A new set of bills passed by the House of Representatives in mid-October could help their efforts considerably. The revisions would allow non-banking firms to offer financial services on behalf of banks. If the bills pass the House of Councilors as expected, people will soon be able to conduct banking activities, such as exchange money, open bank accounts, and possibly even apply for loans at retail outlets like hotels, supermarkets and other companies.

As companies continue their efforts to increase convenience for their customers by expanding online services and retail terminals, more areas of business will fall under provisions of the Personal Information Protection Act. Not only do these companies need to protect the growing amounts of transferred personal information but also the databases on which such information is held, generating many areas of potential revenue for American data security companies.

To find out more about how you can expand your company to Japan, contact JETRO.