Japan FinTech Observer #142

Welcome to the one hundred forty-second edition of the Japan FinTech Observer.

The week commencing December 15 will very much be the last week of significant business activity for the calendar year. The Diet will have its last session, and the Bank of Japan will raise the policy rate to 0.75% at its Monetary Policy Meeting (all economists agree, and who would dare to disagree with the esteemed economists). What economists disagree on is the terminal rate, with forecasts generally ranging from 1% (one more hike in 2026) to 1.5% (two more hikes in 2026, and one in 2027).

The Nikkei brought up an interesting wrinkle on the supplementary budget. The bill allowing for the issuance of deficit-financing bonds has a five-year term that ends in 2026. The ruling coalition does not have the votes to extend it, so it will require some give-and-take with the opposition. Previous situations like this have led to a prime minister being forced to resign (Naoto Kan), for example. We have added the extension to our "things to watch in 2026" list.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: NEC Invests in PopID to accelerate global expansion of biometric payment solutions; MS&AD Ventures participates in Interchange's seed round; Indonesia’s digital credit unicorn Kredivo Group is said to have secured more than $100 million in fresh funding led by long-time backer Mizuho Bank
• Insurance: SMBC Group establishes joint venture company for insurance agency business; InsureMO and FPT Japan enter into strategic partnership
• Banking: Mizuho's Finance-specialized LLM achieves passing level on banking exams
• Payments: Hokkoku Financial Holdings further expands the use of its deposit-based stablecoin "Tochika"
• Capital Markets: SBI Shinsei Bank will re-enter the public markets on December 17; FUNDINNO went public on the Tokyo Stock Exchange Growth Segment; the TSE's measures in response to IPO fraud
• Asset Management: Nissay Asset Management (NAM) has been appointed by the Government Pension Investment Fund (GPIF) to conduct research on impact investing; Folio's "ROBOPRO Fund" net assets exceed JPY 200bn
• Digital Assets: Animoca Brands Japan has signed a Memorandum of Understanding (MOU) for strategic cooperation in the Digital Asset Treasury (DAT) domain with Solv Protocol; SyFu has entered into a strategic partnership with Finverse
• The Last Word: Key Insights from the FSA's Third "AI Public-Private Forum"

Venture Capital & Private Markets

• NEC Invests in PopID to accelerate global expansion of biometric payment solutions: NEC Orchestrating Future Fund, an ecosystem-based corporate venture capital (CVC) fund, has invested in PopID, a U.S.-based provider of face authentication payment services; the investment strengthens NEC’s position in next-generation digital transactions by combining its world-leading biometric authentication technology with PopID’s rapidly growing payment platform; together, NEC and PopID aim to establish a new global standard for secure, seamless, and privacy-centric digital transactions, delivering convenience for consumers and efficiency for businesses
• MS&AD Ventures participates in Interchange's seed round: Interchange, a financial infrastructure company, has completed two significant operational milestones: a $17 million seed funding round, and the receipt of comprehensive regulatory approvals for its wholly-owned subsidiary, Interchange Clearing LLC; the dual announcement positions Interchange as a formidable new entrant in the securities clearing space, a sector historically dominated by legacy institutions; by combining capital injection with regulatory clearance, the company intends to launch a modern correspondent clearing firm and developer platform designed to overhaul how FinTechs and financial institutions connect to U.S. markets
• Indonesia’s digital credit unicorn Kredivo Group is said to have secured more than $100 million in fresh funding led by long-time backer Mizuho Bank; the deal, structured with a sizeable secondary component, is aimed at providing long-pending liquidity to early shareholders, including Jungle Ventures, Alpha JWC Ventures, and MDI Ventures, rather than meeting the company’s capital needs, according to DealStreet Asia

New Fund

• Olympus, a global MedTech company committed to making people’s lives healthier, safer, and more fulfilling, has announced an additional commitment to its corporate venture capital fund, Olympus Innovation Ventures, LLC (OIV), with the launch of Olympus Innovation Ventures Fund II; building on the success of the initial fund, Olympus will deploy $150 million, triple the predecessor fund, to invest in promising MedTech startup companies focused on Gastrointestinal (GI), Urology and Respiratory

Reports

• Inbound investment reaches 18-year high: Japan was one of the most active APAC M&A markets in 2025, with take-private transactions and inbound acquisitions both hitting multi-year highs; M&A by value to December 1 rose to USD207.5bn, more than double the total for 2024, according to A&O Shearman
• Japan's Financial Services Agency (FSA) is advancing two primary programs aimed at strengthening the real economy and improving business financing, one of which is the Enterprise Value Charge (EVC, 企業価値担保権), a new form of security interest that will be launched when the Business Lending Promotion Act (事業性融資推進法) is coming into force on May 25, 2026; simply put, the Enterprise Value Charge is a legal tool that allows businesses to use their entire value—including all current and future-acquired assets—as collateral for a loan; this goes beyond tangible assets to include the intangible strengths that make a specific business unique: things like customer relationships, a team's know-how, and future earning potential; this right is legally established through a licensed trust company, which holds the security interest on behalf of the lender, ensuring the process is formal and regulated

Key Directives and Priorities of Japan's Financial Services Agency

Japan's Financial Services Agency (FSA) meetings with various financial industry associations (on a rotating basis) provide an opportunity to assess the FSA's primary focus areas, significant regulatory shifts, and key initiatives. From the recently published materials from the October 2025 round of discussions, we see the following developments.

1. The Definition of Operational Resilience Has Expanded. The FSA now defines baseline compliance as an integrated capability encompassing geopolitical awareness, anti-fraud agility, and rapid crisis response. Adherence to international sanctions, the swift implementation of enhanced digital KYC, and effective disaster support are no longer separate issues but a single, holistic expectation of institutional resilience.
2. Align Corporate Strategy with the 'Asset Management Nation' Megaproject. This initiative should not be viewed as a standalone opportunity but as the central organizing principle for growth in Japanese finance for the foreseeable future. The agenda's influence over tax policy, product governance, international promotion, and competition makes strategic alignment an imperative for any firm seeking to capitalize on market evolution.
3. Prepare for Deeper, Thematic Supervisory Interventions. The FSA's significant restructuring signals a clear move away from siloed supervision toward more specialized, cross-cutting oversight. Executives must prepare for scrutiny that cuts across traditional business lines, focusing on systemic and emerging risks such as AI governance, interest rate exposure across portfolios, and the fundamental viability of sector-specific business models.
4. Master the Duality of Digitalization: Innovation vs. Infiltration. The FSA is creating a dual mandate for technology. While actively promoting innovation through forums on AI, it is simultaneously demanding more sophisticated defenses against digital financial crime. This requires a balanced strategic approach that treats technology investment not just as a driver of growth but as an essential component of a robust, modern defense against infiltration.

Insurance

• SMBC Group establishes joint venture company for insurance agency business: Ginsen, Mitsui Sumitomo Insurance Company, and Sumitomo Mitsui Financial Group have agreed to establish a jointly invested insurance agency business company on April 1, 2026; the insurance agency business of Ginsen and the corporate business division of Mitsui Sumitomo Insurance Agency Service, a 100% subsidiary of Mitsui Sumitomo Insurance, will be integrated and established as a consolidated subsidiary of Ginsen and an equity-method affiliate of Mitsui Sumitomo Insurance
• InsureMO and FPT Japan enter into strategic partnership: InsureMO has entered into a strategic partnership with FPT Japan, a subsidiary of FPT Corporation; the partners aim to fully support business reforms at domestic insurance companies, leveraging their extensive experience in nearshore development and their high-quality, cost-competitive development system; InsureMO provides a flexible and scalable middle office platform for the insurance industry; it has already been adopted by approximately 30 companies in Japan, and boasts numerous implementations in the global market; FPT has advanced ICT solutions and a wealth of development experience in the insurance industry

Banking

• Mizuho's Finance-specialized LLM achieves passing level on banking exams: Mizuho Financial Group has developed a "finance-specialized LLM (Large Language Model)" trained on banking-specific business knowledge, rules, and procedures, which has achieved passing-level performance on banking practical exams; this model has acquired complex industry-specific rules and regulations unique to the financial sector, as well as internal procedures and business knowledge not typically learned by general AI systems; with this achievement, Mizuho aims to first improve internal operational efficiency and, in the future, dramatically enhance service quality for customers by moving into the development and verification phase for application to more specialized business areas

Payments

• Hokkoku Financial Holdings has enabled the charging of the deposit-based stablecoin "Tochika" from the deposit accounts of Noto Kyoei Shinkin Bank and Hakusan Shinkin Bank, using the digital local currency app "Tochitsuka"; Tochitsuka aims to be a payment system that can be used by individual customers and businesses regardless of their financial institution, and with this latest move, Tochika can now be used by all Shinkin banks with their head offices in Ishikawa Prefecture (Kono Shinkin Bank, Kanazawa Shinkin Bank, Noto Kyoei Shinkin Bank, and Hakusan Shinkin Bank)

Capital Markets

• SBI Shinsei Bank will re-enter the public markets on December 17; the shares were priced at 1,450 yen ($9.34) apiece, compared with a range of 1,440 yen to 1,450 yen, giving the bank a market value of 1.3 trillion yen ($8.37 billion)
• In the inaugural Financial Center Competitiveness Index (FCCI), published by New York University in Abu Dhabi, Tokyo ranks fifth behind New York, London, Singapore and Hong Kong
• FUNDINNO went public on the Tokyo Stock Exchange Growth Segment on December 5, 2025, at the top of the indicated range from JPY 600 to 620. FUNDINNO is the architect of a new, more equitable startup financing landscape for Japan; FUNDINNO's core mission is to fundamentally redesign the flow of capital, talent, and information to power the next generation of innovators; learn how Japan's largest crowdfunding platform is scaling into a full ecosystem play
• The TSE's measures in response to IPO fraud: in response to recent cases of accounting fraud involving companies going public, the Tokyo Stock Exchange (TSE) and Japan Exchange Regulation (JPX-R) are introducing a new set of measures; the primary goal of these new rules is to enhance the quality of the listing examination process and prevent similar fraudulent activities from happening again; this is a collaborative effort, involving not just the exchange but also other key stakeholders in the Initial Public Offering (IPO) process
• Nomura has published its Individual Investor Survey for December 2025: the Nomura Individual Investor Market View Index (Nomura I-View Index), based on respondents' three-month outlook for share prices and calculated by subtracting the percentage of responses for "fall" from that for "rise," was 35.8 in December 2025, up 20.00pt from the previous survey
• The Bank of Japan has published "Trends in the Money Market in Japan"

Asset Management

• Nissay Asset Management (NAM) has been appointed by the Government Pension Investment Fund (GPIF) to conduct research on impact investing; this research engagement was publicly solicited in connection with GPIF’s deliberations on “impact-informed investment,” as outlined in its Fifth Mid-Term Plan and Sustainability Investment Policy; following a competitive proposal process, the NAM was selected as the contractor
• Folio's "ROBOPRO Fund" net assets exceed JPY 200bn: the "ROBOPRO Fund", established on December 28, 2023 by SBI Okasan Asset Management, surpassed 200 billion yen in net assets on December 9, 2025; this milestone was reached approximately 3.5 months after surpassing 100 billion yen in net assets on August 22 of this year; the Fund receives investment advice based on the "ROBOPRO®" investment strategy from FOLIO, a subsidiary of FOLIO Holdings, and is managed by SBI Okasan Asset Management

Digital Assets

• Animoca Brands Japan has signed a Memorandum of Understanding (MOU) for strategic cooperation in the Digital Asset Treasury (DAT) domain with Solv Protocol, the Bitcoin decentralized finance (BTCFi: Bitcoin DeFi) protocol; under this agreement, Animoca Brands Japan and Solv Protocol will support Japanese listed companies in holding and managing Bitcoin
• SyFu has entered into a strategic partnership with Finverse, one of Asia-Pacific’s leading open banking platforms headquartered in Hong Kong; through this partnership, bank and card payment data from Hong Kong, Singapore, the Philippines, Vietnam, and Malaysia can now be integrated directly into the SyFu app; following integrations in Japan (Money Forward) and Europe (Salt Edge), the partnership with Finverse allows SyFu to establish a truly global data connectivity network, covering major Asian markets as well

The Last Word: Key Insights from the FSA's Third "AI Public-Private Forum"

Japan's Financial Services Agency (FSA) has recently published the minutes for its third AI Public-Private Forum, held on November 5, 2025, which brought together a distinguished group of experts to chart a course for the responsible use of Artificial Intelligence in the financial sector. The forum's primary goals are to tackle the complex challenges of protecting personal information in the age of AI and to share practical, real-world strategies for managing the risks of AI in customer-facing services.

The participants broadly agreed on three key areas requiring collective action:

• Knowledge Sharing & Guidelines: There is a strong desire for collaborative efforts to share best practices on risk management and establish industry-wide guidelines, similar to what was successfully done two decades ago to ensure safety in the rollout of internet banking.
• Regulatory Clarity & Sandboxes: The industry needs clearer regulatory interpretations for how existing laws apply to AI (e.g., at what point does an AI's recommendation become a regulated "solicitation"?). There was also a call for "sandbox" environments—safe, controlled settings where firms can test new AI services without facing full regulatory consequences, allowing for innovation with oversight.
• Evolving Governance: Participants recognized that AI governance cannot be a "set it and forget it" policy. It must be a dynamic process that evolves with the technology. This requires continuous monitoring and, critically, a focus on fostering risk awareness and sensitivity among frontline employees, who are the "first line of defense" in identifying potential AI-related issues.

For business leaders and analysts, the key takeaway is that the financial industry's adoption of AI is far more than a technological race. It is a complex and strategic effort to carefully balance the pursuit of innovation with the foundational pillars of risk management, regulatory compliance, and, most importantly, public trust.

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