Japan FinTech Observer #111

Welcome to the one hundred eleventh edition of the Japan FinTech Observer.

For many, this was a three-day working week. For some, it was a four-day working weekend. Reading the announcements of Sony Bank's migration to a new core banking system reminded us of our own time in the industry, when most of the Golden Week holidays in the early- to mid-noughties were occupied by industry-wide system migrations for the Japanese clearing & settlement systems.

Banking was hot last week. And SushiTech, was it hot, or not?

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Digital Garage has invested in Phi Commerce; Seedflex has raised a $3.2 million seed extension round co-led by Z Venture Capital and Iterative; GREE has established a new JPY 2.5bn fund
• Banking: SMBC to acquire a 20.0% equity stake in YES BANK, India's sixth largest private sector bank; Chiba Bank has constructed an "Analysis and Marketing Foundation" on Snowflake and Treasure Data; SBI Sumishin Net Bank has delivered a strong financial performance for the Fiscal Year 2024, but a disappointing 2025 outlook; Sony Bank, in collaboration with Fujitsu, has launched a next-generation digital banking system built on Amazon Web Services (AWS); MUFG will set up an online bank in fiscal 2026, which ends in March 2027
• Payments: NTT DATA Payment Services has unveiled ADAPTIS, a re-branding of its GHL Systems Berhad’s acquisition in 2024; Kaia has collaborated with Tether to bring the stablecoin into its ecosystem, including mini dApps
• Capital Markets: share buybacks are on the rise in Japan; Monex has chosen to migrate its current JASDECPS system to Broadridge’s advanced cloud-based SaaS platform
• Asset Management: Deutsche Bank's investment arm DWS is in talks to form an asset management joint venture in India with the Japanese insurer Nippon Life
• Digital Assets: Futureverse has officially launched RakutenWallet.Pass in partnership with Rakuten Wallet; Bandai Namco Entertainment has launched the Gundam Metaverse on AWS; TOPPAN Edge and Partisia will run a demonstration experiment for digital IDs
• The Last Word: Sushi Tech 2025

Venture Capital & Private Markets

• Digital Garage has invested in Phi Commerce, a leading Indian payment service provider; additionally, DG Financial Technology, the payment business company within the Digital Garage Group, has signed a business alliance agreement with Phi Commerce; as part of this agreement, DGFT has obtained exclusive sales rights in Japan for Phi Commerce's payment solutions; moving forward, DGFT plans to develop a "Processing Platform Business" that will provide payment system infrastructure to external payment operators by leveraging Phi Commerce's solutions
• Seedflex, a Singapore-based FinTech platform co-founded by two former Grab executives, has raised a $3.2 million seed extension round co-led by Z Venture Capital (ZVC), the corporate venture capital firm owned by LY Corporation, and Iterative; the funding also saw participation from existing investor 500 Global and strategic angel investors
• In line with GREE's mission of “Making the world a better place through the power of the Internet,” the company has supported startup growth and development by investing in venture capital firms since 2010; by establishing a new JPY 2.5bn fund and continuing to invest, GREE will continue to support startup growth and development

Other

• NINEJP is the innovation ecosystem for creating globally competitive businesses together with university-led startups support platforms in 9 regions across Japan; NINEJP connects over 150 Japanese universities, research institutions, and other stakeholders, and visualizes the potential of research seeds from multiple perspectives; NINEJP creates businesses that solve social issues with “connecting” and “visualizing”

Banking

• Sumitomo Mitsui Financial Group and Sumitomo Mitsui Banking Corporation have reached an agreement with State Bank of India (SBI), the state-owned bank of the Republic of India, and other financial institutions in India to acquire a 20.0% equity stake in YES BANK, a private commercial bank in India, subject to regulatory approvals, and signed definitive agreements; as a result of the investment, YES BANK is expected to become an equity-method affiliate of SMBC Group and SMBC
• Chiba Bank has constructed an "Analysis and Marketing Foundation" in collaboration with NS Solutions and Nippon Information and Communication to pursue "Advanced One-to-One Marketing"; the newly constructed architecture adopts the cloud data platform Snowflake as the foundation for centrally consolidating analytical data, integrated with the customer data utilization service Treasure Data CDP

• SBI Sumishin Net Bank (SSNB) has delivered a strong financial performance for the Fiscal Year 2024, concluded on March 31, 2025; the results are characterized by robust growth in both income and profitability, although slightly missing targets on ordinary profit (95% of forecast), mortgage loan origination (97%), and number of accounts (92%); however, the FY2025 forecast came in substantially below expectations, in particular as the Bank of Japan policy rate increases of July 2024 and January 2025 will be reflected in an expanded net interest margin only with some delay, i.e. even if the Bank of Japan stays pat, as many analysts expect now, there should be a significant increase in profitability based on the interest sensitivity of results that bank management had communicated during prior quarters
• Sony Bank, in collaboration with Fujitsu, has launched a next-generation digital banking system built on Amazon Web Services (AWS), revamping its core banking system; Sony Bank has been working as the first user of Fujitsu's next-generation core banking system "Fujitsu Core Banking xBank", which provides core digital banking systems by business unit; the next-generation digital banking system is designed with a cloud-native architecture that maximizes AWS services, implementing Sony Bank's various products, services, and transaction functions as microservices; this enables the rapid introduction of new products/services and flexible improvement of existing ones, achieving high "business agility"
• MUFG will set up an online bank in fiscal 2026, which ends in March 2027; Mitsubishi UFJ is expected to announce the online banking plan by the end of the month; the envisaged branchless bank will use Google's cloud platform to curb costs to pit itself against existing online banks that offer lower transfer fees and higher deposit rates than conventional banks; it is also projected to provide services jointly developed with the group's robot asset investment advisor WealthNavi

Payments

• NTT DATA Payment Services has unveiled ADAPTIS, a suite of integrated payment solutions and more that is designed to meet the evolving needs of modern businesses; introduced at an exclusive brand launch event, ADAPTIS marks a strategic milestone in the NTT DATA's transformation, bringing together innovation, flexibility and regional expertise to shape the future of commerce in Southeast Asia; the ADAPTIS launch comes after the GHL Systems Berhad’s acquisition by NTT DATA Japan in 2024, making it a wholly owned subsidiary of one of the world’s top ten global IT service providers
• Kaia has collaborated with Tether, the largest company in the digital assets industry, to integrate native USD₮ on the Kaia network; through this launch, Tether and Kaia aim to strengthen USD₮’s dominance in Asia as the world’s largest USD-backed stablecoin with over 400 million global users by leveraging Kaia’s potential user base of over 250 million through LINE platforms; in Japan, the handling of foreign stablecoins requires an "Electronic Payment Instrument Business Operator" license, such as SBI VC Trade has obtained in order to become the first cryptocurrency exchange allowed to handle Circle's USDC; therefore, making USD₮ available without any restrictions on the LINE Dapp Portal appears fraught with regulatory risk

Capital Markets

• Share buybacks are on the rise in Japan, with announcements during April already making up about 40% of the prior year balance; this does not yet include the approximately USD 16bn buyout of NTT Data through its corporate parent NTT
• Monex has chosen to migrate its current JASDECPS system to Broadridge’s advanced cloud-based SaaS platform; this strategic shift, scheduled to go live in May 2026, comes as Monex prepares to meet the stringent demands of the JASDEC2025 market initiative while optimizing operational efficiency and resiliency; JASDEC is Japan's Central Securities Depository (CSD) for equities, corporate bonds, and investment trust settlements; its upcoming JASDEC2025 system changes are set to go live by Q1 2026

Asset Management

• Deutsche Bank's investment arm DWS is in talks to form an asset management joint venture in India with the Japanese insurer Nippon Life, as the German company seeks to expand in Asia; Nippon Life became DWS's second-largest investor after it bought its 5% stake when Deutsche Bank listed DWS in 2018; Deutsche retained control with 79%; Nippon Life already operates a fund management business in India with 5.67 trillion Indian rupees ($67.18 billion) under management, and it cooperates with DWS on a European-listed India government bond exchange traded fund

Digital Assets

• Futureverse has officially launched RakutenWallet.Pass in partnership with Rakuten Wallet, whose users will now have access to onboard seamlessly to an upgraded version of the RakutenWallet.Pass, unlocking web3 benefits like digital ownership and access to immersive experiences; RakutenWallet.Pass is the first version of next-generation commerce through a secure and intuitive digital wallet integration powered by Futureverse's proprietary Pass technology; both parties have signed a Memorandum of Understanding to work together to further the development of web3 and metaverse initiatives
• Bandai Namco Entertainment has launched the Gundam Metaverse on AWS, the world’s leading cloud provider, for fans across the globe; the Gundam Metaverse is delivered using the new Amazon GameLift Streams capability on AWS, providing a virtual space where fans of the Gundam franchise can gather, interact, shop, and engage with the universe of Gundam on PCs and smartphones in minutes; the Gundam Metaverse integrates digital and physical experiences on the cloud, allowing fans to explore immersive worlds of the Gundam franchise, purchase limited-edition merchandise, enjoy playing mini-games featuring user-created Gundam models with others, and join virtual live events, all at low latency on any device
• TOPPAN Edge and Partisia, a Danish software company specializing in cryptography, will conduct a proof-of-concept test at the Okinawa Institute of Science and Technology Graduate University (OIST) from June to September this year; the purpose of the test is to establish a secure and highly convenient digital student ID using facial recognition, decentralized ID technology, and smartphone NFC authentication

The Last Word: Sushi Tech 2025

SusHi Tech Tokyo 2025 on May 8-10 took place last week, and we attended four sessions for you, capturing perspectives from venture capitalists, on the startup ecosystem, and on stablecoins in Japan. Please read further here:

• Leading VCs and CVCs from Five Southeast Asian Countries
• Japan Through the Eyes of Global Top-Tier VCs
• Rethinking Japan's Startup Ecosystem: Priorities for the Next Decade
• Stablecoins as the Bridge: Unlocking Web3 for the Masses in Japan and Asia

Meanwhile, the author went the extra mile for you, or rather about 40m deep below the Kanda River, courtesy of a Tokyo Metropolitan Government-sponsored tour.

The Kanda River/ Loop Road No. 7 Underground Regulating Reservoir project aims to improve safety against floods that often occur in the middle basin of the Kanda River. The project involved the construction of a 4.5 km long underground tunnel with a 12.5-meter inner diameter beneath the area of Loop Road No. 7 that can store approximately 540,000 m³ of flood water from the Kanda River.

The area that previously encompassed about 40% of natural land, is now about 97% under concrete, eliminating the ability to absorb extreme rain fall, leading to flooding of the adjacent areas. Since the reservoir was built 23 years ago, it has been used 46 times to regulate the water level of the river systems, taking in up to 90% of its capacity at one time, and lowering flood by 1.5m.

The last time it has come into effect, during a typhoon in June 2023, it was used to about 40% capacity. It is currently planned to connect this reservoir with one north of it by drilling another 2km long tunnel, thus serving a system of seven rivers instead of the current five.

Please follow us to read more about Finance & FinTech in Japan, like hundreds of readers do every day. We invite you to also register for our short weekly digest, the “Japan FinTech Observer”, here on LinkedIn, or on the FinTech Observer website.

We also provide a regular short-form Japan FinTech Observer news podcast, available via its Podcast Page. Our global Finance & FinTech Podcast, “eXponential Finance” is available through its own LinkedIn newsletter, or via its Podcast Page.

Should you live in Tokyo, or just pass through, please also join our meetup. In any case, our YouTube channel and LinkedIn page are there for you as well.