Japan FinTech Observer #115

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

Greetings from Lake Biwa! Our annual sake brewery tour & domestic holiday has us hovering around Japan's biggest lake, with our path leading us across Gifu, Shiga, Fukui, and Kyoto prefectures so far. We got to cross some World Heritage Sites off the list before the approaching rainy season caught up with us. Writing this newsletter from a hammock is even more fun than usual!

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Sumitomo Corporation joins bolttech's USD 147m Series C as strategic investor; SMBC Nikko Securities will make a strategic investment in Fund 3 established by Hashed Venture; MUFG partners with Kodansha and CREDEUS on a new fund for Japanese entertainment
• Insurance: Sony Financial Group hosts its investor day prior to its October spin-off
• Payments: SB Payment Service has signed a capital and business alliance agreement with Nomupay; TOPPAN Security has entered into a definitive agreement to acquire dzcard Group; Visa reviewed their one-year "Osaka Area Revitalization Project", along with their payment ecosystem expansion in Japan
• Capital Markets: Options on JGB futures have seen a significant improvement in on-screen market liquidity; Nomura presents its new mid-term plan to 2030
• Digital Assets: Japan's parliament on Friday enacted a bill to revise the payment services law; Mercurity Fintech Holding has entered into a strategic partnership with SBI Digital Markets
• The Last Word: Rakuten Securities' joyful 2FA implementation

Venture Capital & Private Markets

• bolttech, the fast-growing global insurtech, announced the addition of Sumitomo Corporation, one of Japan’s largest trading houses, and Iberis Capital, a leading private equity and venture capital manager in Portugal, as strategic investors; their participation marks the successful close of bolttech’s Series C funding round, with shares acquired by Series C investors in the amount of US$147 million, reflecting a company valuation of US$2.1 billion
• SMBC Nikko Securities will make a strategic investment in Fund 3 established by Hashed Venture, a global blockchain-focused venture capital firm; through this investment, SMBC Nikko Securities expects to further strengthen networks and collaborations with Hashed and promising startups and projects in their portfolio; this investment is positioned as an extension of the Nikko Open Innovation Lab and Funder Storm's initiatives, while also serving as SMBC Nikko Securities' strategic commitment through capital participation with risk-taking in the Web3 domain
• UTokyo Innovation Platform (UTokyo IPC), a venture investment firm wholly owned by the University of Tokyo, has announced a Limited Partner (LP) investment in the VI No.1 Investment Limited Partnership, managed by Vision Incubate; the investment was made through the Academic Startup Acceleration Fund (ASA Fund), operated by UTokyo IPC under the Tokyo Metropolitan Government’s startup strategy, “Global Innovation with STARTUPS"
• Japan Investment Corporation (JIC) has released a comprehensive report, "Going Global: Status of Japanese Startups," dissecting the strategies, hurdles, and success factors for Japanese startups venturing into the international arena

New Funds

• Mitsubishi UFJ Financial Group, its consolidated subsidiaries MUFG Bank, and Mitsubishi UFJ Trust and Banking, Kodansha and CREDEUS have launched a new initiative for creating Japanese entertainment titles through the Japan Creative Works No. 1 Investment LP; in this initiative, WORKS Production Role (CK WORKS, a limited liability company established by Kodansha and CREDEUS) will play the role of creating world-class titles, and WORKS Raising Role (Japan Creative Works No. 1 Investment LP organized and managed by MUFG’s Mitsubishi UFJ Trust and Banking with MUFG Bank among its investors) will raise and provide funds for the creation of entertainment titles
• North American fund manager BGO announced the final closing of its Asia value-add strategy, with the real estate unit of Canadian insurer Sun Life having raised more than $5.1 billion in committed capital for the vehicle and co-investment sidecars; BGO Asia Fund IV, targeting office, hospitality and logistics opportunities in Japan, South Korea, Australia and Singapore, represents the largest closed-end capital raise in the firm’s history

Not FinTech

• Mitsubishi UFJ Capital, Mizuho Capital, SMBC Venture Capital, and MPower Partners participate in EX-Fusion's Series A: EX-Fusion, which is is developing laser fusion technology as a clean energy solution, has completed its Series A funding round totaling approximately 2.6 billion yen; this round consisted of 2.3 billion yen in equity financing and 300 million yen in debt financing; EX-Fusion has previously raised 3 billion yen in funding, bringing the total cumulative funding to 5.6 billion yen with this latest round

Insurance

• Sony has presented its strategy for the spin-off of Sony Financial Group, scheduled for October 2025, in which it will retain a 20% minority shareholding; on the final stretch before listing, Sony managed to ram down a licensing deal the future shareholders' throats by contracting the rights for "Peanuts" in Japan, which Sony Group holds; the marketing opportunities appear endless: "Sony Bank, the bank for your peanuts - the truly rich bank elsewhere" 🤔
• In other news, Sony Bank has established a subsidiary for Web3-related businesses, while the "Sonieum"-centered joint venture with Astar has organizationally moved up in a Sony Group HQ function from its incubation in Sony Network Communications; there is lots of talk about "synergies" with Sony Group, however, it should be up to the new shareholders to set the direction whether there aren't better alternatives for partnerships in the market

• Plug and Play Japan has announced the participants in their Summer 2025 InsurTech batch

Banking

• Plug and Play Japan has announced the participants in their Summer 2025 FinTech batch

Payments

• SB Payment Service (SBPS), a wholly owned subsidiary of SoftBank and the core of the company's finance business, has signed a capital and business alliance agreement with Nomupay, a company that provides local payment methods and global-standard payment products in the EU and Asia; pursuant to this agreement, SBPS will invest approximately US$40 million (approximately JPY 5.8 billion) in Nomupay, subject to obtaining approvals from the relevant authorities, and plans to acquire 13.8% of the company's shares
• TOPPAN Security, a global leader in secure identity and payment solutions, has entered into a definitive agreement to acquire dzcard Group, a prominent provider of smart card solutions and personalization services across Asia and Africa; the acquisition significantly expands the company‘s footprint by doubling its banking cards manufacturing capacity and its network of personalization centers; building on its established presence in the Middle East, Africa, Latin America, and Europe, TOPPAN Security will now offer localized banking card services to clients in high-growth markets including Thailand, the Philippines, Malaysia, India, Morocco, and East Africa
• Visa reviewed their one-year "Osaka Area Revitalization Project", along with their payment ecosystem expansion in Japan: Visa reported significant growth in Visa's contactless payment usage; comparing January-March 2023 with the same period in 2025, convenience stores saw 2.8x growth, restaurants 5.5x, drugstores 7.7x, and supermarkets 3.2x growth; as of the end of March, 150 million contactless payment-enabled cards have been issued, with nearly all cards now supporting contactless payments
• The Bank of Japan has provided English translations of key sections of its September 2024 Payment Systems Report, including (V) Standardization in Financial Services, (VI) The Bank's Approach to General Purpose CBDC, and (VII) Future of Payments
• Bank of Japan Executive Director Kazushige Kamiyama spoke at the third "Meetup with BoJ", hosted by the FinTech Association of Japan, about "Promoting Financial Innovation and the Role of the Bank of Japan FinTech Center"

Capital Markets

• According to Kensuke Yasu, General Manager at the Osaka Exchange, Options on JGB futures have seen a significant improvement in on-screen market liquidity since the beginning of June, following revisions to the market maker program and the entry of a new market maker; while the market was actively traded prior to the BoJ’s introduction of QQE in 2013, it had since lost magmatic force due to a prolonged period of ultra-low JPY rate volatility; however, demand for using these options to hedge interest rate risk has grown significantly since the market turbulence last year; with improved liquidity, the market is now beginning to offer participants enhanced opportunities for both risk management and betting potential JPY rate movements

• Nomura has presented its new medium-term plan, with the goal of consistently achieving a Return-on-Equity of 8 to 10% or more, and income over JPY 500bn by 2030; the plan relies on (I) deepening Nomura's global strategy leveraging the Japan franchise, (II) accelerating growth of stable revenues, and (III) further promoting Nomura's strategy to provide platforms; the strategy will be executed through - now - four business lines, with the recent formation of a banking division

• Nomura has published its quarterly "Outlook for Corporate Earnings"

Digital Assets

• Japan's parliament on Friday enacted a bill to revise the payment services law to allow the issuing of an order to prevent outflows of crypto assets held by investors in Japan when crypto exchanges collapse; also included among the changes, which will be enforced within one year of promulgation, is a new crypo intermediary business license, making it easier for new services to be created, such as exchanges of crypto assets within gaming apps, as well as more accommodating investment options for stablecoin operators
• Mercurity Fintech Holding (MFH), a digital FinTech group, has entered into a strategic partnership with SBI Digital Markets (SBIDM), a subsidiary of SBI Digital Asset Holdings, the digital asset arm of Japan's leading conglomerate SBI Group; the underlying objective of this partnership is to accelerate the adoption of tokenized real-world assets (RWAs) and facilitate its global distribution through regulatory-compliant investment solutions

The Last Word: Rakuten Securities' joyful 2FA implementation

As the Japanese brokerage industry continues to face an unprecedented level of phishing and unauthorized trading attacks, Rakuten Securities, like many other operators, has implemented Two-Factor Authentication (2FA), and enforced its use from June onwards.

Unlike many other implementations, however, Rakuten Securities' approach is truly delightful and draws a little smile whenever I have to use it. Rather than providing a long number via SMS or email, Rakuten Securities sends you two pictures out of the ten shown on the screen (which vary with every log in), and you have to pick them in the right order. For aging eyes, this is a bliss! 2FA does not have to be boring 😃

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