Japan FinTech Observer #133

Welcome to the one hundred thirty-third edition of the Japan FinTech Observer.

What a difference a week makes!

For last week's edition, it seemed a foregone conclusion that Takaichi, coming fresh off her victory in the LDP presidential election, would become Japan's first female prime minister. As Komeito has formally left the 26-year long coalition, that outcome is still likely, but a little less so.

With Trump's announcements coming after the Japan market close on Friday, and being retracted before the opening on Tuesday (with Monday being a public holiday), we missed out on a whole lot of volatility - unless you are in crypto, of course.

On another note, the requirements for the entrepreneur visa have been drastically raised, which will not only reduce the number of startups coming to Japan, but also kill a bunch of associated "market entry" consulting businesses.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: the Tokio Marine Future Fund participates in HappyRobot's Series B; MUFG Ganesha Fund participates in India-based Raise Financial's Series B; Fukuoka Financial Group Venture Business Partners and SMBC Venture Capital participate in KaKa Creation's funding round; Sompo Growth Partners, Mizuho and Sumitomo Mitsui Trust Bank invest in “Coalis Fund No. 1”, one of the first growth funds in Japan
• Banking: SBI Holdings has acquired more than 5% of PT Bank Amar Indonesia; Jefferies Financial's (in which SMBC Group has just agreed to up its stake to 20%) exposure to First Brands' bankruptcy is limited to roughly $45 million; Okasan BANK, which runs on the GMO Aozora Net Bank Banking-as-a-Service, has achieved JPY 5bn in deposits
• Payments: Infcurion, which will go public on October 24, launches latest version of next-generation card platform "Xard"; Nudge's next-generation credit card "Nudge" has reached its 4-year service anniversary; Soramitsu begins stablecoin issuance consulting business for the domestic market; Hitachi Payment Services, with partners IDEX Biometrics and Airtel Payments Bank, has launched India’s first RuPay biometric payment card
• Digital Assets: PayPay takes a 40% stake in Binance Japan; Laser Digital and Solidus Labs partner to deliver crypto-native on-chain and off-chain market surveillance; MUFG plans to issue a sub-ordinated security token bond that is expected to be Tier 2 capital eligible under Basel III
• The Last Word: A Matter of National Security

Venture Capital & Private Markets

• The Tokio Marine Future Fund participates in HappyRobot's Series B: this partnership strengthens HappyRobot's mission to build the AI operating system for the real economy—powering the logisticians, manufacturers, builders, retailers, and operators who keep the world moving; with Tokio Marine’s support, HappyRobot is accelerating its expansion into Japan and Asia, a region that represents one of the most vital hubs of global supply chain and industrial operations; establishing trust and impact early in these markets is central to HappyRobot’s long-term growth strategy
• MUFG Ganesha Fund participates in India-based Raise Financial's Series B: Raise Financial Services, the innovative fintech company behind the popular stock trading and investing platform Dhan, has successfully concluded a significant Series B funding round, raising $120 million; this latest investment propels the Mumbai-based company into the coveted unicorn club, with a post-money valuation of $1.2 billion; the funding round was spearheaded by Hornbill Capital; other notable participants in this round include global financial powerhouses MUFG through its India-focused Ganesha Fund, and BEENEXT, alongside additional contributions from other prominent public market investors

Not FinTech

• Fukuoka Financial Group Venture Business Partners and SMBC Venture Capital participate in KaKa Creation's funding round; with this funding round, KaKa Creation will leverage its proprietary AI animation production platform to actively promote anime projects based on popular intellectual properties (IPs) while pursuing collaborative development with individual creators and Webtoon authors
• Sumitomo Corporation has invested in “Coalis Fund No. 1”, a vehicle established and managed by Coalis Capital; this is Japan’s first specialist fund to acquire unlisted growth-stage startups using buyout methods; the Coalis Fund totals JPY 20 billion, of which Sumitomo Corporation will contribute up to JPY 5 billion as a principal limited partner investor; other LPs include Sompo Growth Partners, Mizuho and Sumitomo Mitsui Trust Bank
• Since entering Vietnam in 2015, Japan’s Nomura Real Estate Development has poured billions of dollars into joint ventures with some of the country’s biggest developers, making Vietnam one of its most important overseas markets; behind those large-scale projects lies a measured and long-term investment strategy

Other

• Selection of partner entities for Global Startup Campus (GSC) Initiative pilot activities: the Science, Technology and Innovation Secretariat under the Cabinet Office has announced the selection of prospective awardees of partner entities that will play a key role in supporting the implementation of the Global Startup Campus (GSC) Initiative pilot activities; additionally, they have selected host institutions that will accept international researchers for the Talent Development (Fellowship) Program

CB Insights' "State of FinTech" for Q3/2025

CB Insights have published their quarterly "State of FinTech" report, showing an increase in funding, but a decrease in the number of deals in Japan for the third quarter.

Early stage deals continue to dominate in the Japan FinTech ecosystem.

Apart from these domestic transactions, the Cool Japan Fund's Series D investment in Singapore's Carro ranks among the Top Ten Series D deals globally in the third quarter. Similarly, Upsider's USD 443m M&A exit to Mizuho is a Top Ten M&A deal. GMO Venture Partners, with four investments, can be found among the Top Ten CVC investors globally, and among the Top Ten investors in Asia, where they are joined by UNLEASH Capital Partners and SBI Holdings.

Banking

• SBI Holdings, one of Japan’s leading financial services conglomerates, has acquired more than 5% of PT Bank Amar Indonesia, becoming the third-largest institutional investor in the digital banking pioneer and signaling growing international confidence in Indonesia’s fintech sector
• Over the weekend, Jefferies Financial (in which SMBC Group has just agreed to up its stake to 20%) sought to reassure investors that it can absorb any potential losses related to the First Brands bankruptcy, after its shares fell 18% last week; the Wall Street bank disclosed its Point Bonita Capital investment fund had about $715 million of exposure to First Brands; Jefferies said its own exposure is limited to roughly $45 million, and can be easily absorbed without threatening its financial condition or business momentum; the sum covers the bank’s share of money owed to Point Bonita and to another financing platform in which Jefferies has an interest
• Okasan BANK, which runs on the GMO Aozora Net Bank Banking-as-a-Service platform with Okasan Securities as the intermediary, has marked one year since its launch and has achieved a breakthrough in deposit balance of 5 billion yen (approximately 33 million USD)
• According to LSEG data, Japanese investment banking revenues are tracking up 12% year on year in 2025 versus 10% for the US and –2% for moribund Europe; this is also in line with the 2024 growth rate, albeit that had lagged the US and Europe
• Chiba Bank at Snowflake World Tour Tokyo: the Snowflake World Tour stopped by in Tokyo on September 11 & 12, with some interesting Finance case studies on the agenda; this presentation details the successful project by Chiba Bank, one of Japan's largest regional banks, which has embarked on an ambitious digital transformation (DX) initiative aimed at delivering the "Ultimate Customer Experience"; at the heart of this strategy is the development of a modern data and AI platform powered by Snowflake; this new foundation is already enabling sophisticated one-to-one marketing, streamlining internal operations, and empowering employees with advanced data capabilities
• The FSA has published an English translation of its Analytical Note on their "Attempt to Identify Early Warning Signals on Credit Risks using Regional Banks’ Loan Data and Macroeconomic Indicators;" this paper presents a machine learning model designed to predict trends in credit risk by leveraging regional banks’ granular loan data combined with macroeconomic indicators, with the aim of detecting early warning signs potentially affecting the management of banks

Payments

• Infcurion launches latest version of next-generation card platform "Xard": Infcurion, which will go public on the Growth Segment of the Tokyo Stock Exchange on October 24, 2025, has started offering the latest version of its next-generation card platform "Xard (Exard)", adding an integrated implementation of "member management," "funding source management," and "credit management"—functions that previously required significant development effort—to the platform's standard features; this enables companies adopting Xard to launch their own branded credit cards, prepaid cards, debit cards, and other financial products with minimal development resources
• Happy fourth year anniversary, Nudge: Nudge's next-generation credit card "Nudge" has reached its 4-year service anniversary in September 2025; Nudge has developed and operates a next-generation credit card that combines the security, safety, and convenience of financial services with highly entertaining experience design featuring elements like "choosing by design" and "supporting your favorites;" through this approach, Nudge is working toward realizing a world where people naturally integrate financial services into their daily lives; under this mission, Nudge has added various Japan-first innovations to its cloud-native credit card service platform "Nudge Platform," enabling not only further enhancement of the user experience but also new value co-creation with diverse partners
• Soramitsu begins stablecoin issuance consulting business for the domestic market: Soramitsu and Soramitsu CBDC have launched consulting and development support services for domestic Japanese business operators; these services support the design, construction, and operation of stablecoin issuance systems in compliance with the Payment Services Act and other regulations; this service extends the national-scale infrastructure development expertise in central bank digital currencies (CBDC) and stablecoins that the Soramitsu Group has cultivated globally to the Japanese domestic market
• IDEX Biometrics, Hitachi Payment Services, and Airtel Payments Bank launch India’s first RuPay biometric payment card at Global Fintech Fest: this innovative solution leverages IDEX Pay, an advanced biometric smart card technology, enabling fingerprint authentication as a second factor of authentication (AFA) for digital transactions; the launch follows the Reserve Bank of India’s (RBI) recent regulatory update permitting biometric authentication for digital payments, paving the way for more secure and user-friendly payment experiences

Capital Markets

• The Bank of Japan has published a Working Paper on an "Exploratory Scenario Analysis Considering the Growing Presence of Domestic and Foreign Investment Funds"; the scenario considers a case in which investment funds, predominantly open-end funds, liquidate their securities holdings in response to a negative shock in the global financial market and the real economy, similar to what happened during the Global Financial Crisis
• The Chambers Global Practice Guides have published "Shareholders Rights and Shareholder Activism 2025"; we have extracted the Japan chapter for you, prepared by Mori Hamada & Matsumoto

Digital Assets

• We have launched the fourth season of the eXponential Finance Podcast, starting with a panel discussion on "Building Institutional Grade Digital Asset Rails" that we moderated at WebX 2025 (Aug. 25-26), featuring Betty Sun-Lucas from the Stellar Development Foundation, Qin En Looi from Saison Capital, and Matt Harrop from Figment; listen to this episode on various platforms via our Spotify Podcaster page or on YouTube
• PayPay takes a 40% stake in Binance Japan: Binance Japan has entered into a capital and business alliance agreement with PayPay; through this partnership, PayPay has acquired a 40% stake in Binance Japan; this partnership represents a collaboration between PayPay, the leading cashless payment company used by over 70 million people in Japan, and the Binance Group, which operates the world's largest cryptocurrency trading platform and possesses innovative technological capabilities; the goal is to provide Japanese users with highly convenient new financial experiences
• Laser Digital, the digital asset subsidiary of Nomura Group, and Solidus Labs, the category-definer for crypto-native trade surveillance and risk monitoring, have announced a partnership to deliver crypto-native on-chain and off-chain market surveillance; under this partnership, Solidus Labs will equip Laser Digital with advanced detection capabilities that monitor trading behavior across exchanges, OTC markets, and DeFi venues - reinforcing Laser Digital's risk and compliance operations and supporting evolving regulatory expectations across jurisdictions
• MUFG to issue Public Offering Digital Unsecured Subordinated Bond as a Security Token via Progmat: MUFG has announced that, as part of preparations to issue the “Mitsubishi UFJ Financial Group 1st series unsecured subordinated security token bond with optional-redemption clause, write-down upon the occurrence of a non-viability event clause and transfer restriction clause” (the ST Bond), it has submitted an amended registration statement to the Director-General of the Kanto Local Finance Bureau; the ST Bond is expected to be Tier 2 capital eligible under the Basel III International Regulations; the issuance will be the first publicly offered security token bond issued by MUFG and is expected to be the first of its kind issued in the Japanese banking sector

A Matter of National Security: Japan's Food Self-Sufficiency Ratio Stagnates at 38%

Japan's food self-sufficiency rate on a calorie basis remained unchanged from the previous year at 38% for fiscal year 2024, tying the second-lowest figure on record. The data, released by the Ministry of Agriculture, Forestry and Fisheries (MAFF) on Friday, paints a picture of a nation heavily reliant on foreign imports for staple commodities, despite shifts in domestic production and consumption patterns.

In contrast, the self-sufficiency rate on a production-value basis saw a notable increase, rising three percentage points to 64%. This divergence underscores the impact of fluctuating crop yields and sharp price increases, particularly for rice, on the two primary metrics used to measure the nation's food security.

The fiscal year 2024, which ran from April 1, 2024, to March 31, 2025, saw the average daily calorie supply per capita rise to 2,248 kcal from 2,197 kcal in the previous year.

Japan's extremely low energy self-sufficiency rate, with the last reading from November 2024 at 15.2%, is more widely understood than the matter of food security. We have argued previously, for the example at the Impact Future Weekend in May 2025, that Japan's priorities for startup ecosystem development should be much more tilted to the three critical sectors of defense, (renewable) energy, and food.

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