Japan FinTech Observer #117

Welcome to the - exceptionally late - one hundred seventeenth edition of the Japan FinTech Observer.

At the Monetary Policy Meeting held last week, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period: The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5 percent. The next Bank of Japan Monetary Policy Meeting will take place on July 30 & 31.

The Bank also published its "Plan for the Reduction of the Purchase Amount of JGBs"; for the period from April 2026 to March 2027, the pace of reduction in the amount of JGB purchases by the Bank of Japan will be reduced from JPY 400bn to JPY 200bn per quarter, thus resulting in monthly purchases of JPY 2.1trn by the end of this period.

In addition to the Monetary Policy Meeting, the Bank of Japan has also submitted its semi-annual "Report on Currency and Monetary Control" to the Diet, comprising coverage of the economic and financial situation, monetary policy conduct and monetary policy tools, as well as the content of decisions made at the monetary policy meeting.

This week's policy highlight is the 55th General Meeting of the Financial System Council and the 43rd Joint Meeting of the Financial System Subcommittee, held today (Wednesday), which includes "the status of the system surrounding crypto assets" on its agenda - ultimately discussing the alignment of crypto and securities law, including taxation.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Techfino, a FinTech non-banking financial company, has secured investment from Saison Capital; MS&AD Insurance Group has established its JPY 10bn 2025 vintage fund; Sumitomo Mitsui Banking Corporation has entered into an investment agreement with AN Venture Partners I; Mizuho has collaborated with lending financial institutions including Orix Bank and Joyo Bank to form a long-term private fund with agri-solar power plants
• Insurance: Neo First Life Insurance, a member of the Dai-ichi Life Group, announced a new AI-based system that detects potential fraudulent insurance claims early
• Banking: the National Police Agency and eight city banks and other financial institutions signed an "Information Sharing Agreement" to combat fraud
• Payments: Japan will require banks and credit card companies to use IC chip-based identity verification for non-face-to-face account openings starting in April 2027; LifeCard has partnered with personalization innovator Pulse iD to launch a new generation of credit cards; Simplex has launched its stablecoin issuance and redemption system "Simplex Stablecoin"
• Capital Markets: Kraken Digital Asset Exchange and Alpaca have partnered to expand crypto trading access; social trading app Woodstock started offering after-hours trading services for US stocks; KBRA, a global full-service credit rating agency, is opening a Tokyo Office
• Asset Management: Sumitomo Mitsui Financial Group, Sumitomo Mitsui Banking Corporation, SMBC Nikko Securities, and Sumitomo Mitsui Card Company, together with SBI Holdings and SBI Securities, will jointly create new asset management services for Olive
• Digital Assets: Coincheck has entered into a strategic partnership with MynaWallet, a company providing a web3 wallet solution utilizing the Japanese government-issued My Number Card
• The Last Word: Japan's long working hours

Venture Capital & Private Markets

• Techfino, a FinTech non-banking financial company (NBFC), has announced that it has successfully secured INR 65 crore in equity funding; the investment comes from Stellaris Venture Partners and Saison Capital, the investment arm of Japan-listed Credit Saison; this capital infusion will enable the company to significantly enhance its secured lending operations, particularly targeting underserved micro and small enterprises (MSMEs) across India
• MS&AD Insurance Group has established the JPY 10bn "MSIVC2025V Investment Limited Partnership"; investors in the fund are the group companies Mitsui Sumitomo Insurance Group, Mitsui Sumitomo Aioi Life Insurance, and Mitsui Insurance Sumitomo Insurance Capital; the fund is set up for a ten year operating period, with a possible extension for another two years

Not FinTech

• Sumitomo Mitsui Banking Corporation has entered into an investment agreement with AN Venture Partners I, operated by ANV Management, which invests in the biotechnology sector; ANV was established in 2022 with the purpose of creating global biotechnology companies based primarily on excellent research and drug discovery seeds from Japanese universities, research institutions, and companies; ANV is operated by capitalists and experts from pharmaceutical companies who have high knowledge and experience in the field; through their extensive networks with academia and deep understanding of drug discovery seeds, they support the social implementation of research with great social significance through entrepreneurship
• Mizuho Securities, ML Power, a 100% subsidiary of Mizuho Leasing, Blue Sky Solar, and Blue Sky Asset Management have collaborated with lending financial institutions including Orix Bank and Joyo Bank to form a long-term private fund with agri-solar power plants as underlying assets through non-recourse project finance and equity investment

Insurance

• Neo First Life Insurance, a member of the Dai-ichi Life Group, announced a new AI-based system that detects potential fraudulent insurance claims early, which will be gradually introduced from June to October 2025; conventionally, analysis by expert assessors in Neo First Life Insurance has been a major method to detect fraud signs; however, since the 2024 fiscal year, as a part of its efforts to become a data-driven organization, Neo First Life Insurance has been developing an internal system utilizing Business Intelligence (BI) tools to improve detection capabilities of fraudulent insurance claims; by integrating AI support into its internally developed BI tools, Neo First Life Insurance will achieve faster and more accurate fraud detection
• What Japan’s Insurance Market Reforms Mean for U.S. Insurers: Long regarded as one of the world’s most stable insurance markets, Japan’s non-life sector is now experiencing major disruption; deregulation aimed at unwinding keiretsu-style cross-shareholding agreements between insurers and their clients is freeing up capital and reshaping longstanding business relationships

Banking

• In light of the extremely concerning situation where the damage amount from special fraud in 2024 reached a record high, and the damage amount from SNS-type investment and romance fraud reached approximately three times the previous year's amount, the National Police Agency and eight city banks and other financial institutions signed an "Information Sharing Agreement" on June 18, 2025 to strengthen measures that contribute to arrests and damage prevention; the agreement provides for the rapid sharing of information related to accounts involving transactions that the Agreement Financial Institutions have identified through monitoring as having a high possibility of being fraud victims, with relevant prefectural police and the National Police Agency
• Jenius Bank review (2025): Simple online banking with competitive rates and no fees; Jenius Bank is the digital banking division of SMBC MANUBANK, a California state-chartered commercial bank based in Los Angeles, part of Sumitomo Mitsui Financial Group; Jenius Bank offers personal loans and high-yield savings accounts
• The FSA published an English translation of its "Analytical Notes - Current trends in deposits under the increasing interest rate environment"; this report analyzes the current trends in deposit balances and deposit interest rates under the increasing interest rate environment; while overall deposit balances are increasing, differences in growth rates are observed depending on institution type and deposit type; a positive correlation between deposit yields-particularly those influenced by deposit campaigns-and deposit balance growth are observed
• The Financial Services Agency (FSA) and the Bank of Japan (BOJ), in cooperation with three major banks, conducted the second scenario analysis on climate-related risks; the FSA and the BOJ have published a report "Second Scenario Analysis on Climate-Related Risks (Banking Sector)", which outlines major findings, and issues and challenges drawn from the exercise
• Financial institutions' role in promoting GX: A variety of public-private-sector initiatives have been undertaken to achieve a green transformation (GX) in Japan, but there are many uncertainties that could influence future outcomes; how should we assess the impact of the Trump administration’s policy shift, and what role do financial institutions have to play? NRI Group's Junko Ishikawa spoke with Hideki Takada, Director of the GX Acceleration Agency, which was formed last July as a central body for promoting GX initiatives through public/private partnerships

Payments

• Japan will require banks and credit card companies to use IC chip-based identity verification for non-face-to-face account openings starting in April 2027, under a revised rule aimed at curbing fraud; the change to the enforcement of the Act on Prevention of Transfer of Criminal Proceeds will make it mandatory for financial institutions to confirm customers' identities via IC chips embedded in My Number identity cards or driver's licenses
• LifeCard, one of Japan's leading credit card providers, has partnered with personalization innovator Pulse iD to launch a new generation of credit cards that puts personalization at the heart of the cardholder experience; the rollout begins in September 2025 across LifeCard's 6 million customers, with sign-ups also open to new customers
• Simplex has launched its stablecoin issuance and redemption system "Simplex Stablecoin", which includes functions for stablecoin issuance and redemption, as well as features for account opening including KYC and integration with Japanese yen deposit/withdrawal systems; currently designed for fund transfer business-type stablecoins (Type 1 electronic payment instruments), it is planned to sequentially support deposit-type (tokenized deposits) and trust-type (Type 3 electronic payment instruments) stablecoins, making it applicable to various businesses utilizing stablecoins; by seamlessly integrating with Simplex's web3 integrated solution "Simplex Fourth," it provides end-to-end services from business wallet setup to contract operations, enabling rapid establishment of comprehensive stablecoin transaction infrastructure
• PayPal announced the appointment of Mich Yoden as Head of Japan, effective immediately; Mich Yoden brings two decades of experience in scaling digital payments services, paired with deep market expertise in Japan. Prior to joining PayPal, he led Strategic Partnerships at Stripe Japan, where he was responsible for driving partnerships with major financial institutions, building the local business infrastructure and formulating growth strategies for the Japanese market

Capital Markets

• The Japan Securities Clearing Corporation welcomes Citi as a JGB OTC Clearing Member
• Kraken Digital Asset Exchange and Alpaca have partnered to expand crypto trading access through a single integration; Alpaca has integrated Kraken Embed to enhance Alpaca’s existing crypto capabilities across 49 U.S. states (with plans to expand into Canada, the EU and the U.K.); Alpaca provides modern investing infrastructure for fintechs, trading apps and financial services platforms; as demand for crypto grows across its ecosystem, Alpaca prioritized a solution that could scale with its partners, maintain regulatory standards, and reduce operational complexity
• Social trading app Woodstock started offering after-hours trading services for US stocks; in addition to regular trading hours (9:30–16:00 EST / 22:30–5:00 Japan time (during daylight saving time)), traders can also transact during pre-market (17:00–22:30 Japan time (during daylight saving time)) and after-market (5:00–9:00 Japan time (during daylight saving time)); US stocks, which were previously only available during the late night hours of Japan time, can now be traded during the day
• SMBC Nikko Securities has published its "Corporate Earnings Outlook for 2025-2026", presenting a comprehensive analysis of the Japanese equity market, centered on the firm's proprietary NIKKO250 index, which covers approximately 75% of the total market capitalization of all listed Japanese companies; the outlook revises its forecast for the fiscal year 2025, downgrading near-term profit expectations, while introducing a new, more optimistic forecast for fiscal year 2026; the analysis is framed by a cautious outlook on the global macroeconomic environment, potential risks from US trade policy, and domestic political uncertainty stemming from the upcoming Upper House election in Japan
• The NLI Research Institute has published "Investors Trading Trends in the Japanese Stock Market: An Analysis for May 2025"
• KBRA, a global full-service credit rating agency, announced a key milestone in its continuing international expansion: the opening of a new office in Tokyo, the latest addition to KBRA’s growing footprint, which now includes seven offices across North America, Europe, and Asia-Pacific; in addition to four offices in the U.S.—in New York, Pennsylvania, Maryland, and a Chicago office which opened in 2023—KBRA also has an office in Dublin, Ireland, which opened in 2017, and a London headquarters that opened in 2019

Asset Management

• Sumitomo Mitsui Financial Group, Sumitomo Mitsui Banking Corporation, SMBC Nikko Securities, and Sumitomo Mitsui Card Company, together with SBI Holdings and SBI Securities, have concluded a "Business Partnership Agreement for Individual Asset Management Services" for the purpose of jointly creating new asset management services for Olive; furthermore, based on this business partnership and subject to approval by relevant authorities, the partners plan to establish a preparatory company to plan and provide the New Joint Service, aiming to commence business within fiscal year 2025; the investment ratio will be: Sumitomo Mitsui Financial Group 10%, SMBC Nikko Securities 30%, Sumitomo Mitsui Bank 20%, SBIHD 10%, and SBI Securities 30%

Digital Assets

• Coincheck has entered into a strategic partnership with MynaWallet, a company providing a web3 wallet solution utilizing the Japanese government-issued My Number Card; prior to this collaboration, Coincheck Group N.V., which is Coincheck’s parent company, made an investment in MynaWallet; MynaWallet is currently developing a service called “MynaWallet,” which aims to allow anyone to manage digital assets—such as cryptocurrencies, stablecoins, NFTs, and digital IDs—safely, securely, and with ease; the service is built on a unique position that combines the My Number Card, Decentralized Identifiers (DIDs), Verifiable Credentials (VCs), and web3 wallet functionality; MynaWallet is expected to play a key role in driving web3 adoption in Japan through public-private sector collaboration

The Last Word: Japan's long working hours

Maybe they aren't that long?

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