Japan FinTech Observer #130

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

Last week, the World Athletic Championships took place in Tokyo, putting the Olympic Stadium finally to the grand use it was designed for (including an audience!).

Whether inspired by the athletic performances or not, the Bank of Japan stretched themselves into launching the divestment phase for the approximately 7% of equity market capitalization they have accumulated in the form of ETFs - mostly under Kuroda's leadership - albeit at a rate that would take more than 100 years to divest.

Lastly, the field is set for the LDP President's election on October 4. Takaichi and young Koizumi are leading the polls. If you are into horse trading, now is the time.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Antler has announced the appointment of Hiro Kiga as Partner of Southeast Asia and Japan; SoftBank Group will lay off nearly 20% of its Vision Fund team globally
• Insurance: KKR has completed the acquisition of Hoken Minaoshi Hompo Group (HMH), a major domestic insurance distributor
• Banking: SMBC Group has completed its acquisition of a 20% equity stake in India's YES BANK; it will acquire another 4.2% from a company affiliated with The Carlyle Group; separately, SMBC sold its entire 1.65% equity stake in Kotak Mahindra Bank; Caulis to establish "Grid Data KYC" in partnership with 10 nationwide power companies; SBI Sumishin Net Bank will migrate its core banking system provided by IBM Japan to an Amazon Web Services cloud environment by early 2028
• Payments: PayPay will be accepted at more than 2 million merchants across South Korea; Indonesia's GoPay users can now make payments at QRIS-enabled merchants in Japan; Norinchukin Bank, Progmat, and Datachain have successfully completed the first phase of verification for cross-border payments with Korea; Densan System has concluded a basic agreement with JPYC Corporation, and joined Japan Smart Chain as a Vision Partner; the Kaia DLT Foundation and LINE NEXT have announced "Project Unify", a Web3 super app based on stablecoins; Uniqlo announced that it would be shutting down "UNIQLO Pay"
• Capital Markets: Infcurion to IPO on the TSE Growth Market in October; SMBC Group and Jefferies launch Wholesale Japanese Equities Joint Venture; the TWSE and the TSE debuted their first cross-border exchange-traded funds
• Asset Management: AlpacaTech & Vertex plan joint development of innovative Asset Management solutions
• Digital Assets: SBINFT and Japan Blockchain Infrastructure have completed development to integrate Japan's domestic public blockchain "Japan Open Chain" with the NFT marketplace "SBINFT Market"
• The Last Word: The 100 Year ETF Divestment Plan

Venture Capital & Private Markets

• Antler has announced the appointment of Hiro Kiga as Partner of Southeast Asia and Japan, based in Singapore; this appointment reinforces Antler’s expansion in Asia and its commitment to bridging the startup ecosystems of Japan and Southeast Asia; Hiro will spearhead Antler’s early-stage investment strategy in Japan while working closely with the Southeast Asia team to accelerate day zero investing in both regions, increase founder mobility, and catalyze more cross-border startups
• SoftBank Group will lay off nearly 20% of its Vision Fund team globally as it shifts resources to founder Masayoshi Son’s large-scale artificial intelligence bets in the United States, according to a memo seen by Reuters and a source familiar with the plan; the cuts mark the third round of layoffs at SoftBank’s flagship fund since 2022; Vision Fund entities currently have over 300 employees globally
• Investing in Tomorrow with JIC: The Worldfolio covers Japan Investment Corporation (JIC), which is channeling capital into transformative sectors, fostering innovation, strengthening global competitiveness, and driving sustainable growth across industries while supporting the nation’s long-term economic development and technological leadership

Insurance

• In a move signaling a significant strategic push into the Japanese financial services landscape, U.S. investment giant KKR & Co. has completed the acquisition of Hoken Minaoshi Hompo Group (HMH), a major domestic insurance distributor; the transaction sees KKR acquiring the company from investment funds serviced by Advantage Partners, a prominent Japanese private equity sponsor; while the official financial terms of the deal were not publicly disclosed, sources familiar with the matter have indicated a purchase price slightly exceeding JPY 30 billion (approximately USD $204 million); this pivotal acquisition is being financed predominantly through two of KKR's key investment vehicles: its Asian Fund IV and the K-Series funds; the involvement of the K-Series is particularly telling; these vehicles include "evergreen funds designed for wealthy individuals," which implies a capacity for patient, long-term capital deployment, distinct from the fixed-term horizon of traditional private equity funds; this financial structure suggests that KKR's ambitions for HMH extend beyond a typical leveraged buyout and subsequent exit; tt points toward a long-term vision of building a durable and expansive platform within Japan's personal finance ecosystem, aligning with HMH's stated mission to become a "Life Support Platform Provider" for an era defined by a "100-year lifespan;" KKR has been explicit about its strategic intent, articulating a clear plan to use HMH as a foundational "hub for making further deals in the industry;" the firm's public statements outline a dual-pronged growth strategy; the first prong involves fostering organic growth within HMH by enhancing its operational capabilities, a process KKR refers to as "sales enablement;" the second, more transformative prong is an inorganic growth strategy centered on pursuing a series of "bolt-on acquisitions:" this clearly positions the HMH acquisition not as an end in itself, but as the inaugural move in a broader campaign to consolidate Japan's fragmented insurance agency sector

Banking

• Sumitomo Mitsui Financial Group (SMBC Group) and Sumitomo Mitsui Banking Corporation (SMBC) have announced that its acquisition of a 20% equity stake in YES BANK from State Bank of India and other financial institutions has been completed; in addition, SMBC has signed a definitive agreement with CA Basque Investments, a company affiliated with The Carlyle Group, a global investment firm, to acquire an additional 4.2% equity stake in YES BANK; separately, to rebalance its strategic investment portfolio, SMBC sold its entire 1.65% equity stake in Kotak Mahindra Bank, also a private‑sector commercial bank in India, as of September 10th, 2025
• Caulis to establish "Grid Data KYC" in partnership with 10 nationwide power companies: Caulis will begin providing "Grid Data KYC" in partnership with 10 electricity transmission and distribution companies nationwide, utilizing electricity contract information to simultaneously achieve prevention of fraudulent account opening, enhancement of ongoing customer management, and reduction of management costs; the services is expected to launch on October 15, 2025; this service will enable specified business operators such as financial institutions, fund transfer service providers, and credit card companies to perform identity verification more efficiently and at lower cost than before; the 2023 amendment to the Enforcement Regulations of the Electricity Business Act allows electric power companies to use customer information for official purposes; in April 2024, the Ministry of Economy, Trade and Industry, the Personal Information Protection Commission, and the National Public Safety Commission expressed the view that financial institutions and electric power companies can compare customer information for anti-money laundering purposes
• SBI Sumishin Net Bank has decided to evolve the open-system core banking system "NEFSS (Next Evolution in Financial Services Systems)" provided by IBM Japan into a new architecture that enables expansion aligned with future growth, and to fully migrate to an Amazon Web Services cloud environment by early 2028; since commencing operations in September 2007, SBI Sumishin Net Bank has utilized cutting-edge technology as a "digital bank" that enables full banking functions including deposits, payments, and loans to be completed online, working to improve convenience, safety, and experiential value; the bank has surpassed 8.25 million accounts (as of March 2025) and 11 trillion yen in total deposits (as of August 2025), and is pursuing various initiatives to achieve sustainable growth

Payments

• PayPay will be accepted at more than 2 million merchants across South Korea from late September 2025 through Alipay+, a wallet gateway operated by Ant International; the move will allow PayPay Corporation’s 70 million registered users to pay at shops, restaurants, convenience stores and tourist spots across South Korea wherever the Alipay+ logo is displayed; users must complete identity verification on the PayPay app in Japan before making payments
• GoPay users can now make payments at QRIS-enabled merchants in Japan, following Bank Indonesia’s move to expand its cross-border QR code payment system to the country in August 2025; this allows Indonesian travelers to pay at Japanese merchants by scanning JPQR codes using the GoPay app; GoPay, operated by GoTo Financial, already supports QRIS cross-border payments in Thailand, Malaysia, and Singapore
• K Bank has successfully completed the first phase of verification for the "Project Pax," a proof-of-concept (PoC) initiative that utilizes stablecoins for cross-border remittances between South Korea and Japan; on the Korean side, K Bank, Shinhan Bank, Nonghyup Bank, Pairsquare Lab, and Korea Digital Asset Custody participated in the Pax Project; on the Japanese side, Norinchukin Bank, fintech company Progmat, and Datachain took part; the participating companies held a closing report meeting for the project in Tokyo, where they shared the results
• Densan System has concluded a basic agreement with JPYC Corporation for a joint study toward the social implementation of payment, remittance, and settlement services utilizing the Japanese yen stablecoin "JPYC"; both companies will iteratively develop use cases for B2C/B2B payments and inter-company settlements by utilizing Densan System's bill collection agency and convenience store payment network of over 65,000 stores built across convenience stores and drugstores nationwide, along with the Japanese yen stablecoin "JPYC" issued by JPYC; rather than stopping at verification, they will advance cross-channel design usable across various channels such as physical store payments and e-commerce payments, implementing them as services with social implementation in mind
• In other news, Japan Smart Chain Welcomes Densan System as a New Vision Partner: AltX Research has announced that Densan System has joined as a Vision Partner for “Japan Smart Chain (JSC),” a Japan-sovereign Layer 1 blockchain developed by AltX Research; JSC is the foundational, Japan-sovereign blockchain platform, featuring full compatibility with Ethereum and validated entirely by domestic industry leaders; it is engineered as a “compliance-first” Layer 1, embedding blacklist enforcement and transaction prioritization - making it a trusted infrastructure for regulated digital-asset services with regulatory integrity but without sacrificing usability
• The Kaia DLT Foundation and LINE NEXT have announced "Project Unify", a Web3 super app based on stablecoins; this app will be provided as a standalone application on the Kaia platform, as well as a Mini DApp within LINE NEXT's messenger service; the Unify app is scheduled to launch its beta version within this year, followed by gradual expansion of consumer-focused Web3 and fintech features including stablecoin deposit yields, payments, remittances, on/off-ramps, NFTs, and gaming; through the Unify app, users can experience an innovative mechanism where they earn real-time incentives simply by depositing stablecoins into their wallet; users can also send stablecoins to anyone through messaging features and make payments or receive paybacks at online and offline merchants worldwide; additionally, they can easily utilize a wide range of on/off-ramp solutions unlike anything available before, and enjoy over 100 Web3 apps that provide additional rewards; the "Unify Mini DApp" service will be provided by integrating existing DApp portals and will feature differentiated functionality according to each country's regulatory environment
• Uniqlo announced that it would be shutting down "UNIQLO Pay," the QR code payment feature on its official smartphone app, the "UNIQLO app," in January 2026; "With the diversification of payment methods, the use of QR code payments and credit cards has increased. We have decided to shut down the service in light of these changes in the environment and the recent usage of UNIQLO Pay," the company said

Capital Markets

• Infcurion to IPO on the TSE Growth Market in October: the Tokyo Stock Exchange has approved the initial listing of Infcurion's shares on the Growth Market, with the listing date scheduled for Friday, October 24, 2025; Infcurion's listing application provides a detailed look into the company that positions itself not as a direct financial service provider, but as a critical "Payments Enabler"—providing the foundational technology for a wide range of businesses to launch and manage their own payment and financial services; the filing reveals a company at an inflection point: after years of strategic investment and losses, Infcurion has achieved profitability, backed by strong revenue growth and a landmark capital and business alliance with one of Japan's largest financial institutions, Sumitomo Mitsui Financial Group (SMBC Group)
• SMBC Group and Jefferies launch Wholesale Japanese Equities Joint Venture: Sumitomo Mitsui Financial Group (SMBC Group), its wholly owned subsidiary Sumitomo Mitsui Banking Corporation (SMBC) and SMBC Nikko Securities, and Jefferies Financial Group have signed a memorandum of understanding to expand their global strategic alliance by establishing a joint venture in Japan to conduct their wholesale Japanese equities business; this joint venture will be the cornerstone of the wholesale Japanese equities business, encompassing equity capital markets (ECM) within investment banking, equity sales and trading, and equity research across global markets; with a view to further deepening the strategic partnership, SMBC plans to increase its economic investment in Jefferies to up to 20.0% on an as converted and fully diluted basis; SMBC will continue to own less than 5% of a voting interest in Jefferies
• The Taiwan Stock Exchange (TWSE) and Tokyo Stock Exchange (TSE) marked a milestone in regional financial integration with the debut of their first cross-border exchange-traded funds (ETFs), reinforcing both countries' ambition to become an Asian Asset Management Center; Nomura Asset Management Taiwan Ltd. launched the Nomura TOPIX Feeder ETF (Ticker: 009812) on the TWSE, offering investors exposure to Japan's equity market via the NEXT FUNDS TOPIX ETF (Ticker: 1306)— the largest ETF in Japan by assets under management; this fund is also included in Japan's NISA tax-free investment program, making it one of the most widely held ETFs among Japanese retail investors; simultaneously, the NEXT FUNDS TIP FactSet Taiwan Innovative Technology 50 Index Exchange Traded Fund (Ticker: 412A) debuted on the TSE; the fund tracks the NEXT FUNDS – Nomura Taiwan Innovative Technology 50 ETF (Ticker: 00935), reflecting the strength and dynamism of Taiwan's technology-driven economy; notably, companies in the AI and semiconductor sectors account for 72% of the Index's total market capitalization; Taiwan's benchmark index has more than doubled since 2020, reaching an all-time high this month, with foreign ownership approaching 46%
• NLI Research Institute has published "Investor Trading Trends in the Japanese Stock Market: An Analysis for August 2025"

Asset Management

• AlpacaTech & Vertex plan joint development of innovative Asset Management solutions: AlpacaTech, a subsidiary of FOLIO Holdings, which provides innovative financial solutions within the SBI Group, has commenced a partnership for joint research and development with Vertex Investment Solutions, a 100% subsidiary of Dai-ichi Life Holdings with strengths in quantitative investment management; using both companies' technologies, they aim to develop unprecedented solutions by collaboratively developing multiple medium to long-term investment strategies

Digital Assets

• SBINFT and Japan Blockchain Infrastructure have completed development to integrate Japan's domestic public blockchain "Japan Open Chain" with the NFT marketplace "SBINFT Market" operated by SBINFT; with the completion of this development, "SBINFT Market" users can now trade NFTs issued on Japan Open Chain, in addition to Ethereum and Polygon

The Last Word: The 100 Year ETF Divestment Plan

At the Monetary Policy Meeting last week, the Policy Board of the Bank of Japan decided, by a 7-2 majority 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.

As is customary, publication of the decision was followed by Governor Ueda's press conference.

Key Takeaways

• Policy Rate Held Steady: The BOJ maintained its key policy rate, the uncollateralized overnight call rate, at its current level of around 0.5%, signaling a continued accommodative stance.
• ETF and J-REIT Sales Announced: In a significant move, the BOJ decided to begin selling its massive holdings of Exchange-Traded Funds (ETFs) and Japan Real Estate Investment Trusts (J-REITs).
• Extremely Gradual Pace of Sales: The sales will be conducted at a very slow pace to avoid market disruption: approximately ¥330 billion per year for ETFs and ¥50 billion per year for J-REITs (on a book-value basis). At this rate, a full exit would take over 100 years.
• Two Dissenting Votes for a Rate Hike: Two policy board members, Mr. Takada and Mr. Tamura, dissented from the decision to hold rates, both advocating for a rate hike to 0.75%.
• Cautious on Future Hikes: Governor Ueda emphasized that future policy adjustments remain data-dependent. He highlighted significant downside risks from overseas economies, particularly related to US trade policy, suggesting the BOJ needs more time to assess the economic impact before considering further rate hikes.
• Economic Outlook Unchanged: The BOJ's assessment of the Japanese economy is one of "gradual recovery," with inflation in the latter half of the 2% range and expected to move sustainably toward the 2% target.

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