Japan FinTech Observer #114

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

Never a dull moment in banking! Deal-making galore, and finally the cash on those balance sheets is put to productive use (rather than stock buy backs and increased dividends, i.e. financial engineering), with the aim of developing new offerings and increase revenue. MUFG just did a triple-dip, acquiring the OG's at Moneytree, licensing Minna Bank's core banking system, and concluding a partnership with Sakana AI, the latter reportedly at a scale that it will make the heavily funded startup profitable this fiscal year.

NTT Docomo's acquisition of SBI Sumishin Net Bank fills a gaping strategic hole, and puts it on par with its three major telecom competitors in being able to offer an all-around financial services, telecom, and point system ecosystem. The money that SBI Holding receives for its SSNB shareholdings, plus a capital infusion by NTT Group, will allow it to repay the remaining outstanding bailout debt of SBI Shinsei Bank to the Japanese government. Japanese taxpayers should be grateful.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: MUIP's portfolio company Moneytree acquired by MUFG Bank; Sumitomo Mitsui Financial Group has invested additional capital into Asuene; the Japan International Cooperation Agency (JICA) invests in Brazil's AGL Holding (Agrolend); new funds from Incubate Fund, Mitsubishi Corporation, and Fujitsu
• Insurance: Dai-ichi Life Holdings and M&G announced a new long-term strategic partnership across asset management and life insurance; Tokio Marine Holdings has launched "Tokio Marine GX"
• Banking: NTT Docomo has launched a tender offer for SBI Sumishin Net Bank; NTT to acquire ~8% of SBI Holdings; MUFG will partner with Minna Bank, Accenture and Google to adopt the core banking system developed for Fukuoka Financial Group's digital bank for its own offering
• Payments: JR West has launched its new payment service "Wesmo!"; Blue Lab and Digital Entertainment Asset will launch "gamification aimed at sustainable regional revitalization" with Circle's USDC as reward
• Capital Markets: MUFG Securities Canada has chosen FIS’ Post Trade Processing Platform; Carbon EX has launched a white label offering for its carbon credit and emissions trading platform; Ginco has suplied blockchain technology to e-dash Corporation for the "Carbon Credit Market of Tokyo"; PostPrime's TakaTrade has obtained a license to start commodity CFD trading
• Digital Assets: R3, which is represented in Japan through a joint venture with SBI Group, has entered into a strategic partnership with the Solana Foundation to create next-generation, hybrid TradFi/DeFi capital markets
• The Last Word: Japan Loses Status as the World's Top Creditor

Japan FinTech Observer Webinar - June 16, 2025

We are honored to host Michinori Kanokogi, CFA, the Head of Solution Research at Nissay Asset Management for a webinar on AI in Wealth Management. Kanokogi leads the research and development of digital investment solutions for investors.

Previously, Kanokogi led the launch of AQR Capital Management’s Japan business as head of investment management. He also has experience in multi-manager investment at Russell Investments, equity portfolio management at UBS, and management consulting at PwC and Deloitte.

Kanokogi translated several finance/AI books, including Advances in Financial Machine Learning, Expected Returns, and Beyond Diversification. He holds a bachelor's of English from the University of Tokyo, a master's of English from Kyoto University, and an MBA from INSEAD. He is a CFA charterholder.

The webinar will be conducted via Google Meet, and registrations on Luma are open.

Venture Capital & Private Markets

• MUFG Innovation Partners' portfolio company Moneytree has signed a basic agreement with MUFG Bank and its consolidated subsidiary WealthNavi regarding the acquisition of Moneytree’s shares; MUIP invested in Moneytree in February 2019 through the MUFG Innovation Partners No.1 fund and has supported collaboration discussions between Moneytree and various business units within MUFG; following the completion of the acquisition, MUFG intends to launch a new digital bank, expand its customer base, and collaborate in the corporate domain to deliver high value-added financial services
• Sumitomo Mitsui Financial Group has invested additional capital into Asuene, with the aim to further strengthen their strategic capital and business alliance, accelerating decarbonization in Japan and on a global scale; as part of the transaction, Sumitomo Mitsui Banking Corporation and Asuene have agreed that “Sustana”, a cloud service provided by SMBC to support corporates in the calculation and reduction of greenhouse gas (GHG) emissions, will be succeeded by Asuene and merged with Asuene’s products in the future
• The Japan International Cooperation Agency (JICA) has concluded an investment agreement with AGL Holding (Agrolend), a Brazilian digital bank financing the agricultural sector in the country; this project aims to contribute to improving the financial access and agricultural operations of small and medium-sized farmers in Brazil, while increasing the productivity of the country’s agricultural supply chain; by investing in Agrolend, a digital bank that finances small and medium-sized Brazilian farmers, the project promotes sound and efficient management of the industries and distributors under Agrolend’s financing programs for small and medium-sized farmers

New Funds

• Incubate Fund has established "IF Growth," a fund specialized in growth capital, and completed its first close; the final fund size is planned to be 30 billion yen; in parallel, its fund specialized in seed stage investments has also completed its final close at a total of 20.5 billion yen including related funds
• Mitsubishi Corporation (MC) has established MC Global Innovation (MCGI) to serve as the operating company for its corporate venture capital (CVC) platform; to date, MC’s Business Groups have invested in startups closely linked to their current domains; with the new CVC company, MC’s total startup investment, including its existing commitments, will be approximately JPY 100 billion (about USD 700 million)
• Fujitsu Limited has announced its new corporate venture capital fund, Fujitsu Ventures Fund II, with a total capital commitment of 15 billion yen, effective July 1, 2025; this fund will be managed through Fujitsu Ventures Limited; Fund II will continue to invest in promising startups both domestically and internationally, following the approach of Fund I; strategic business investments will focus on reinforcing business collaboration, while increasing investments in companies with cutting-edge technologies that hold potential for future business partnerships

Not FinTech

• MUFG Capital and MUFG Trust & Banking have invested in TOWING Corporation, an impact startup founded in February 2020, originating from Nagoya University, with the mission of "realizing a super-circular society starting from sustainable next-generation agriculture"; the company develops and sells high-performance biochar "Soratan" (宙炭), a soil improvement material created using their proprietary technology for efficiently selecting and cultivating soil-derived microbial communities on carbonized materials from regional unused biomass
• The Environment Ministry is offering ¥60 billion ($415 million) of support for the commercialization of homegrown climate and environmental technology through the Japan Green Investment Corp. for Carbon Neutrality, a government-backed fund that invests in ventures to reduce emissions; the effort is expected to promote innovations in areas from aquaculture to flood defenses

Insurance

• Dai-ichi Life Holdings and M&G announced a new long-term strategic partnership across asset management and life insurance; the partnership is expected to generate at least $6 billion in new business flows into funds managed by M&G over the next five years, of which at least $3 billion is intended to be in M&G’s market-leading high-alpha strategies across public and private markets; similarly, the partnership is expected to generate at least $2 billion in new business flows for Dai-ichi Life HD over five years, through a combination of balance sheet investments in, or distribution of, asset management products offered by Dai-ichi Life HD’s subsidiaries, and through Dai-ichi Life HD’s distribution of jointly developed products
• Tokio Marine Holdings has launched "Tokio Marine GX," a new international offering founded upon GCube, a global leader in underwriting and risk management for renewable energy; this offering aims to further promote Tokio Marine's efforts to support the achievement of carbon neutrality and the transition to a decarbonized society; GCube is a managing general agency (MGA), acquired through Tokio Marine's U.S. subsidiary HCC Insurance Holdings in 2020

Banking

• Japan's three megabanks are set to boost their lending profitability as they benefit from the Bank of Japan's monetary policy normalization, although net interest margin (NIM), a key metric of lending profitability, dropped at two of the megabanks — Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) — in the fiscal year ended March 31, according to S&P Global Market Intelligence data; MUFG's margin fell to 0.83% from 0.87%, and SMFG's margin declined to 0.92% from 1.04%; the NIM of Mizuho Financial Group improved to 0.45% from 0.42%
• NTT Docomo has launched a tender offer for SBI Sumishin Net Bank (SSNB), and the latter has resolved at its board of directors meeting held on Thursday, May 29, 2025 to express its opinion in support of the tender offer, and to recommend that the SSNB's shareholders tender their shares in the Tender Offer; concurrently, SSNB resolved to enter into a business alliance agreement with DOCOMO and Sumitomo Mitsui Trust Bank (SMTB), and a business alliance agreement with DOCOMO, SBI Holdings and SBI Securities
• In parallel with NTT Docomo's tender offer for SBI Sumishin Net Bank (SSNB), NTT also executed a Capital and Business Alliance Agreement and an Investment Agreement with SBI Holdings; SBI Holdings will allot 27,000,000 shares of common stock (8.91% of the total number of issued shares) to NTT Group; after the allotment, NTT Group and Sumitomo Mitsui Financial Group will hold identical stakes in SBI Holdings

• MUFG will partner with Minna Bank, Accenture and Google to adopt the core banking system developed for Fukuoka Financial Group's digital bank for its own offering, expected to go live before the end of 2026; the acquisitions of WealthNavi, Moneytree, and Kanmu (BNPL) will be integrated, and the newly announced partnership with Sakana AI will be leveraged to develop new digital services

Payments

• JR West has launched its new payment service "Wesmo!" under the brand concept "Moving is Value," after becoming the first domestic railway operator to register as a Type II funds transfer service provider under the Payment Services Act; the company has previously provided the J-WEST credit card and ICOCA (the JR West's version of JR East's SUICA electronic money); Wesmo! enables easy payments through BLUE tag touch or QR code scanning/display, and can be used at over 1.6 million locations nationwide including Wesmo! member stores and convenience stores with the Smart Code mark; JR West has integrated services from Infcurion and TRUSTDOCK to implement Wesmo!
• Blue Lab, in which Mizuho Bank holds a ~15% stake, and Digital Entertainment Asset (DEA), a Singapore-based company operating a global problem-solving game platform business, will launch a joint proof-of-concept experiment "GLOCAL AGENTS – Local Secret Society" themed around "gamification aimed at sustainable regional revitalization" starting in June 2025; users will receive rewards based on their earned points, and by using USDC, a stablecoin, for these rewards, the partners will verify the potential for new inter-regional economic circulation utilizing digital currency; SBI VC Trade, a subsidiary of SBI Holdings, will participate as a Web3 technology verification partner for USDC (US dollar-pegged stablecoin) transmission/reception and cross-border payments
• Anderson Mori & Tomotsune have published the third part of their payments series, providing an outline of the issues regarding intermediary services (as defined in the Payment Services Act) for exchange of electronic payment instruments and cryptoassets

Japan's Super-Long JGBs

• On 6 November 2007, the Ministry of Finance auctioned 40-year JGBs for the first time ever; the ¥100bn issue was oversubscribed by a factor of 5.012, with ¥99.9bn worth of bids ultimately accepted; the issue was sold to yield 2.435%, a 10.5 basis point (bp) premium to the 30-year JGB yield
• For comparison, the highest winning bid yield for the 40-year bond auction held by the Ministry of Finance this past week was 3.135%, the highest since the 40-year bond auctions began; the issue was oversubscribed by a factor of only 2.21, the lowest since July 2024; this was also the first auction since the amount issued was reduced from ¥700bn to ¥500bn

Capital Markets

• MUFG Securities Canada has chosen FIS’ Post Trade Processing Platform to transform its back-office operations, enabling MUFG to streamline workflows, mitigate risks, and offer greater transparency to institutional investors
• Carbon EX has launched a white label offering for its carbon credit and emissions trading platform, "Carbon EX"; this new service enables local governments and regional financial institutions to build their own branded carbon credit trading platforms, helping foster regionally-driven carbon economies and promoting local sustainability
• Ginco has suplied blockchain technology to e-dash Corporation, which has been commissioned by the Tokyo Metropolitan Government to develop and operate the "Carbon Credit Market of Tokyo", a carbon credit market for businesses launched by the Tokyo Metropolitan Government in March 2025 to achieve its goal of halving CO2 emissions in Tokyo by 2030 from the 2000 level
• PostPrime's consolidated subsidiary, TakaTrade, has received permission from the Minister of Agriculture, Forestry and Fisheries and the Minister of Economy, Trade and Industry to operate as a commodity futures trading company under the Commodity Futures Trading Act; "PostPrime" is an SNS platform specializing in finance and economics; to expand into new services, PostPrime established TakaTrade in October 2024 and has been developing a trading platform centered on commodity CFD trading while conducting discussions with relevant authorities
• The Ministry of Finance - Japan has published its monthly JGB newsletter
• Listed companies basically face no restrictions under the current legal framework when conducting pre-general meeting disclosure; the Financial Services Agency has curated all relevant documents across various regulations on a single web page

Asset Management

• S&P Global has updated their assessment of global equity fund performance, and with "only" ~82% of funds underperforming the S&P Japan 500, by comparison to other markets Japan's asset management delivered a respectable result

Digital Assets

• According to 10x Research, Metaplanet is trading at an implied $596,154 per Bitcoin, more than five times its actual price; while Metaplanet has regularly featured among Japan's most shorted stocks, such shorts have been expensive given the inflated valuation
• R3, which is represented in Japan through a joint venture with SBI Group, has entered into a strategic partnership with the Solana Foundation to create next-generation internet capital markets that fuse public and private blockchains; this initiative combines Corda's strengths in identity, privacy, and compliance with Solana's openness, and is expected to accelerate the convergence of traditional finance (TradFi) and decentralized finance (DeFi), leading to dramatic expansion of the tokenized asset ecosystem

The Last Word: Japan Loses Status as the World's Top Creditor

Japan has lost its position as the world's top creditor after 34 years, falling behind Germany, even as its net external assets last year hit a record high.

Japan's net external assets as of the end of last year stood at 533.05 trillion yen ($3.7 trillion), up 12.9 percent from a year earlier, according to Ministry of Finance - Japan data.

That, however, was below Germany's 569.65 trillion yen, meaning Japan lost the top spot it has held since 1991.

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