Japan FinTech Observer #67

Welcome to the sixty-seventh edition of the Japan FinTech Observer.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Rogers Investment Advisors is taking significant exposure in the Japanese venture capital space; Global Brain Corporation and DG Daiwa Ventures have been selected by Korea’s Ministry of SMEs and Startups; Money Forward Venture Partners’ HIRAC FUND has invested in AiCAN; Questry, Royalty Bank and Mizuho Securities plan to create a fund for anime film production; Japanese automobile firm Suzuki Motor has launched its first investment fund in India, supporting financial inclusion
• Insurance: Korea’s Kyobo Life Insurance Group and Japan’s SBI Group have entered into a strategic business partnership; MUFG Innovation Partners have profiled their portfolio company Qoala
• Banking: the Financial Services Agency and the Bank of Japan provide an update on their common data platform; Hokkoku Bank presents Finswer as its first Banking as a Service (BaaS) partner; Taiwan’s Financial Services Commission has green lighted Taipei Fubon Bank’s application to seek approval from financial authorities in Japan; MUFG Bank and Krungsri have signed a Memorandum of Understanding with the Eastern Economic Corridor Office of the Kingdom of Thailand
• Payments: Infcurion has published its annual Consumer Payment Trend Survey; out of PayPay’s 64 million registered users, 30 million have been KYC’ed; “Myakupe!”, Expo 2025 Osaka, Kansai’s own e-money has been launched; Digital Garage acquired the shares of FEELIST; Taiwan’s Taishin Bank has teamed up with JCB International to launch the JCB Apollo Card
• Capital Markets & Asset Management: the Japan Securities Dealer Association (JSDA) released a document titled “Major issues facing the industry” that comprehensively lists key initiatives the association is planning to pursue in order to improve the overall ecosystem
• Digital Assets: Tokushima, which ranked first as the prefecture most skilled in household financial management, also had the highest average transaction amount on Mercoin; the SBI Financial and Economic Research Institute has outlined a vision for Japan’s financial future; double jump tokyo is providing support for web3 integration to Ubisoft
• The Last Word: Bank of Japan chief’s ‘honeymoon period’ is over

IVS 2024 & IVS Crypto 2024 Kyoto

We would like to send our appreciation and thanks to the Headline — Asia and IVC teams for another outstanding conference in Kyoto. With a 20+% increase in attendance over last year, and way more side events than anyone can possibly attend, the numbers and the ecosystem that has been developed speak for themselves.

Extensive recaps of Day 1, Day 2, and Day 3 are available on the IVS Note page, and the recording of the signature Launchpad startup competition event on the IVS YouTube channel.

Venture Capital & Private Markets

• There will be ‘an explosion of opportunity’ in Japanese venture capital, says advisory firm: Edward Rogers of Rogers Investment Advisors says despite Japan looking dysfunctional to outsiders, it has the political will to resolve its issues, and that the company is taking significant exposure in the Japanese venture capital space
• Korea’s Ministry of SMEs and Startups has selected 15 global fund management companies for 2024, which will be seeded with 150 billion won to create new funds worth more than 1.2 trillion won; Global Brain Corporation was selected for its Co-GP Fund with Shinhan Finance, and DG Daiwa Ventures for its DGDV Fund III
• Money Forward Venture Partners’ HIRAC FUND has invested in AiCAN, a company developing child consultation support services; their main service, “AiCAN Service,” supports the improvement of operational efficiency and decision-making quality in child abuse response sites; they also provide data analysis and related proposals and training as part of their support package; by accompanying each local government in solving their specific issues, they contribute to reducing the burden on staff and developing human resources
• Questry and Royalty Bank announced the formation of the “Talent of Talents” content fund; this initiative, in collaboration with Mizuho Securities, aims to secure funding for anime film production
• Japanese automobile firm Suzuki Motor has launched its first investment fund in India, named Next Bharat Ventures, with a corpus of Rs 340 crore; the initiative aims to support social impact startups in sectors such as agriculture, financial inclusion, rural supply chains, and rural mobility; Next Bharat Ventures will function through a residency program, with its first cohort beginning in October this year

Insurance

• Korea’s Kyobo Life Insurance Group and Japan’s SBI Group have entered into a strategic business partnership agreement to strengthen the cooperation in digital finance and technology; since 2022, Kyobo Life Insurance and SBI Group have been collaborating in the venture capital and fintech sectors, including a venture capital fund in Southeast Asia; this partnership will facilitate the exchange of technological capabilities and know-how across Kyobo Life Insurance Group and SBI Group, as well as unlock new business opportunities in the digital space for Kyobo Life Insurance Group and SBI Group
• MUFG Innovation Partners have profiled their portfolio company Qoala, a dynamic Indonesia-based InsurTech startup that leverages technology to provide affordable and accessible insurance solutions; the company transforms the entire range of insurance solutions, from product distribution to claims management by integrating machine learning and digital workflows

eXponential Finance Podcast

The 139th edition of the eXponential Finance Podcast has been published.

Kay Kyeongsik Woo is the Founder of MVL (Mass Vehicle Ledger), TADA Singapore (ride hailing) and ONiON Mobility (electric tricycles). Others talk about DePIN (Decentralized Physical Infrastructure Network), and Kay has been building exactly that before the term was even coined. A fascinating journey!

This episode is available on Apple Podcasts, YouTube, Amazon Music and many other major platforms via our Spotify Podcaster Page.

Banking

• The Financial Services Agency and the Bank of Japan have been taking initiatives toward data integration with a view to further enhancing their monitoring capabilities and reducing the burden on financial institutions; in fiscal 2023, the FSA and the BOJ considered practical operations and started to collect granular data in a phased manner to establish a novel framework for data collection and management (common data platform); they have now published a summary of the progress and next steps
• Hokkoku Bank, a group company of Hokkoku Financial Holdings, announced its partnership with Finswer as its first Banking as a Service (BaaS) partner; Hokkoku Bank will provide banking functions to “Finswer Bank,” an online bank scheduled to launch by the end of 2024 by f9k, a subsidiary of Finswer, which aims to streamline invoice and expense-related tasks in one stop
• Taiwan’s Financial Services Commission has green lighted Taipei Fubon Bank’s application to seek approval from financial authorities in Japan to open a branch in Tokyo in light of the Japanese market’s growth prospects and the bank’s overseas deployment needs; so far, eight Taiwanese banks operate a total of 10 branches and one subsidiary in Japan, most of which are in Tokyo while the others are in Osaka and Fukuoka, the commission said
• MUFG’s core banking subsidiary MUFG Bank and Bank of Ayudhya (“Krungsri”) have signed a Memorandum of Understanding with the Eastern Economic Corridor Office of the Kingdom of Thailand; through this MoU, they will support investments in ESG, startup companies, and the digital sector; in recent years, the Thai government has been aiming to nurture high-value-added industries through initiatives such as Thailand 4.0, and the Eastern Economic Corridor has been designated as a region for concentrated capital investment

Payments

Infcurion — Individual Payment Service Usage

• Infcurion has published its annual Consumer Payment Trend Survey, including above ranking of Individual Payment Service Provider based on usage, which sees PayPay leading, with Rakuten Card, IC Transit Cards (e.g., Suica), Rakuten Pay, and WAON (Aeon Group) in pursuit
• PayPay announced that out of 64 million registered users, the number of users who have completed identity verification surpassed 30 million; users who have completed identity verification can access all of PayPay’s services, including higher payment limits for bank transfers and “PayPay Credit”; these verified users account for 82% of the total transaction volume and 78% of the total number of transactions, indicating that they use “PayPay” more frequently compared to unverified users
• Sumitomo Mitsui Financial Group, along with its subsidiaries Sumitomo Mitsui Banking Corporation (SMBC) and Sumitomo Mitsui Card Company (SMCC), and NEC have launched the operating platform for “Myakupe!”, Expo 2025 Osaka, Kansai’s own e-money, and the “Myaku Myaku Reward Program”
• Digital Garage acquired the shares of FEELIST, a system development company based in Sapporo with six locations nationwide and a team of 120 engineers, in line with DG’s efforts to hire more tech talent to strengthen its new business development foundation, in particular focused on payment platforms
• Taiwan’s Taishin Bank has teamed up with JCB International to launch the JCB Apollo Card, offering up to 3.8% rewards points under the “swipe everyday, swipe big program”; it features a base 0.3% redemption rate, and an additional 3.5% redemption rate at selected merchants in Taiwan and in Japan, South Korea, Europe, the UK, and in the USA

Capital Markets & Asset Management

• The Japan Securities Dealer Association (JSDA) released a document titled “Major issues facing the industry” that comprehensively lists key initiatives the association is planning to pursue in order to improve the overall ecosystem along a number of dimensions, such as Citizens, Market Intermediaries (i.e., association members), Social Collaboration, Market Infrastructure, International Capital Markets, and the JSDA organization itself

Digital Assets

Highly skilled household financial management and Bitcoin transaction volume coincide in Tokushima

• In FY2023, ending in March 2024, the Bitcoin transaction service within the Mercari app was the №1 service in the industry in terms of number of new crypto asset accounts opened; based on data published by the Japan Virtual and Crypto Assets Exchange Association, a total of 3.1 million new accounts were opened during FY2023; with a share of 61.5%, Mercoin was leading the industry, opening just over 1.9 million new accounts; Tokushima, which ranked first as the prefecture most skilled in household financial management in the latest Sony Life lifestyle survey, also had the highest average transaction amount on Mercoin
• The SBI Financial and Economic Research Institute has outlined a vision for Japan’s financial future in its recently published “Guidelines for considering the creation of next-generation financial infrastructure”; the guidelines highlight the importance of a layered financial system that transcends traditional sector boundaries and accommodates new technologies like digital currencies and tokenized assets; it suggests a need to review and modernize existing legal and regulatory frameworks, particularly regarding data privacy, investor classifications, and the safety net for deposits
• Laser Digital launched a new crypto macro-economic newsletter, aptly titled “Laser Focus”
• double jump.tokyo, a leading blockchain application developer and experienced producer of successful web3 games in Japan, is providing support for web3 integration to Ubisoft and has become a key marketing partner for their web3 game, Champions Tactics, in Asia; as a first initiative, Champions Tactics: Grimoria Chronicles will integrate with the Oasys Layer 2 HOME Verse blockchain, developed and operated by double jump.tokyo

The Last Word: Bank of Japan chief’s ‘honeymoon period’ is over

What do you talk about when you bump into one of the most popular Japan watchers in Kyoto Station? Germany’s elimination from the Euro 2024 tournament, of course! For anything else, there is this stellar CNBC interview from last week, a hard-hitting four minutes you should not miss.

If you would like to see more of our content, please head over to the Tokyo FinTech YouTube Channel or check out the eXponential Finance Podcast. Registrations for the Tokyo FinTech Meetup have moved to Luma.

We have also created two LinkedIn groups, the “Japan Startup Observer” if your interest in Japan goes beyond FinTech, and the “FinTechs of India” to capture the developments on the subcontinent. We invite you to join both these groups.

Have an awesome week ahead.