Japan FinTech Observer #161

Welcome to the one hundred sixty-first edition of the Japan FinTech Observer. This week, we are excited to have new subscribers join us from the Bank of England, the Central Bank of Ireland, the Dubai Police Academy, Harvard Law School, and BBVA Asset Management en España, among others 🙏

We are publishing today (Tuesday) just minutes before the Bank of Japan's Monetary Policy Meeting results are being released, and although the expectation is for no change in the policy rate, banks have been closing strong in the morning session.

We are quite heavy on Policy & Economics this week, given that we are at the beginning of the fiscal year, and considering that the government's new growth strategy is going to be published over the summer, so all the think tanks/study groups are busy publishing.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Stablecoin issuer JPYC Inc. secures 2.8 Billion Yen in Series B second close to accelerate Digital Yen integration; field service SaaS provider MeetsMore backed by SMBC Edge and MS&AD Ventures in JPY 3bn funding round; JAFCO's consolidation during the fiscal year ending March 2026
• Insurance: a case study on Nippon Life Insurance
• Banking: new SMBC Group initiatives; AEON Financial Service targets JPY 100bn profit by 2030 amid domestic cost reform and rate shifts
• Payments: Digital Garage targets Japan’s cash-heavy legacy verticals; PayPay and AU Pay broaden international access
• Capital Markets: Nomura achieves record net revenue on global expansion and asset management pivot; JSCC leverages Canton Network to pioneer 24/7 real-time collateral settlements; Mizuho Securities taps Behavox AI to overhaul global communications surveillance; Morningstar's Japan ETF market Q1 2026 flow analysis
• Digital Assets: DCJPY trial launches new era - tokenized deposits in security settlement; Credit Saison and Coincheck to integrate crypto assets into consumer credit services
• The Last Word: Energy Dependency

Venture Capital & Private Markets

• Stablecoin issuer JPYC Inc. secures 2.8 Billion Yen in Series B second close to accelerate Digital Yen integration: JPYC Inc., the issuer and operator of the Japanese yen-pegged stablecoin "JPYC," has successfully raised 2.8 billion yen in the second close of its Series B funding round; this latest injection brings the total cumulative capital raised in the Series B round to approximately 4.6 billion yen; the funding round saw participation from a diverse group of institutional and strategic investors, including NCB Venture Capital, Tekmira Holdings, Metaplanet, Canal Ventures, Sumitomo Life Insurance (SUMISEI INNOVATION FUND), i-nest capital, NTVP, North Pacific Bank, and Yokohama Capital

Not FinTech

• Field service SaaS provider MeetsMore backed by SMBC Edge and MS&AD Ventures in JPY 3bn funding round: MeetsMore Inc., a Tokyo-based startup providing cloud-based platforms for the field service and social infrastructure sectors, has secured approximately 3 billion yen in an extended Series B funding round; the extension round was led by SMBC Edge, with participation from X&KSK (a venture fund co-founded by Keisuke Honda), MS&AD Ventures, Daiwa House Ventures, and several existing investors; the capital injection acts as a continuation of the strategic round initially announced in March 2025, aimed at solidifying co-creation frameworks with financial institutions and corporate partners

Other

• JAFCO's consolidation during the fiscal year ending March 2026: the fiscal year ending March 31, 2026, represents a period of change in the five-decade history of JAFCO Group, characterized by a fundamental restructuring of its corporate identity, geographic focus, and financial architecture; as the firm navigates a period of profound transition, the results disclosed on April 24, 2026, illuminate a deliberate retreat from a global tri-polar structure toward a concentrated, domestic-first strategy aimed at maximizing capital efficiency and shareholder value; under the stewardship of President and CEO Keisuke Miyoshi, JAFCO has orchestrated a pivot that is as much about philosophical alignment as it is about accounting precision, culminating in the transition to non-consolidated financial reporting and a scheduled change of the company’s trade name to JAFCO Co., Ltd., effective October 1, 2026
• The Bank of Japan Review has published "Recent Developments in Private Funds"
• Private Equity International has published "How global GPs are making inroads in Japan"

Insurance

• The Investment Integration Project has released a comprehensive case study examining how Nippon Life Insurance, Japan’s largest private asset owner with ¥83,549 billion in assets, has chartered a course toward system-level investing through its innovative “P-squared Investing” framework that connects People and Planet; the report offers an in-depth look at how Nippon Life has integrated systems thinking into its investment strategy, recognizing that environmental stability, social well-being, and financial performance are profoundly interconnected—and that long-term market returns ultimately depend on the health and resilience of the systems that underpin them

Banking

• The Bank of Japan has published its "Financial System Report" for April 2026
• New SMBC Group initiatives: SMBC Group flooded us with announcements to modernize and diversify its global business operations last week; these include: (I) the launch of SMBC Connect, a specialized brand designed to provide seamless, high-tech transaction banking services on a global scale; (II) the establishment of the Next-Generation Agribusiness Council to address food security and support the scale-up of agricultural corporations through financial and policy initiatives; (III) the expansion of SMBC Group's asset management advisory services, offering comprehensive OCIO solutions to help institutional asset owners navigate complex market environments; and (IV) SMBC also introduced an AI-driven sales application developed with ACES to assist corporate sales representatives in delivering faster, more personalized client proposals
• AEON Financial Service targets JPY 100bn profit by 2030 amid domestic cost reform and rate shifts: the fiscal year ending February 28, 2026, represented a critical "foundational building" phase for AEON Financial Service, set against the backdrop of Japan’s historic pivot from a zero-interest-rate environment to a "world with interest rates"; while top-line expansion remained resilient, the period was defined by structural shifts in the domestic banking sector and a concerted effort to modernize infrastructure; performance was characterized by a successful defense of margins in a rising-rate environment, offset by the absence of historical securitization gains and increased procurement costs as the company prepares for its five-year "Vision 2030" transformation
• LayerX, the Tokyo-based AI and FinTech powerhouse with a number of first-tier banking clients, has acquired AgenticSec, an AI-native security startup; the move marks LayerX’s first-ever M&A transaction and signals a formal entry into the cybersecurity market

Payments

• Digital Garage targets Japan’s cash-heavy legacy verticals: Digital Garage Group, through its payment subsidiary DG Financial Technology (DGFT), is executing a targeted vertical expansion designed to capture value in Japan's most resistant cash-heavy sectors; by embedding its proprietary "Cloud Pay" infrastructure into specialized B2B and B2C workflows, the group is transitioning from a general-purpose processor to a critical provider of social infrastructure; this shift, categorized under the "DG FinTech Shift" mandate, prioritizes the modernization of the childcare supply chain and the removal of physical barriers in urban mobility
• PayPay Corporation began offering “Overseas Payment Mode” to its customers in Japan, starting with South Korea on September 2025; from from late April 2026, PayPay will launch Overseas Payment Mode at another popular destination for Japan’s outbound travelers, Taiwan; travellers from Japan will be able to make payments with “PayPay” at places displaying the “TWQR” logo; furthermore, when using Overseas Payment Mode, they will be able to check amounts paid in Japanese yen at a glance; in conjunction with the launch in Taiwan, a new exchange rate calculator has also been added, so customers can use “PayPay” in Taiwan with the same convenience they experience in Japan
• AU Payment Corporation has integrated its smartphone payment service "au PAY" with Hong Kong's smartphone payment service "WeChat Pay HK", enabling users to make payments using the WeChat Pay HK app by scanning a QR code installed at au PAY affiliated stores throughout Japan; in addition to the already available "WeChat Pay" service for mainland China, this will provide visitors from Hong Kong with a smooth payment experience using an app they are familiar with in their home country

Policy & Economics

• Cultivating "quality" entrepreneurship in a labor-constrained economy: the Small and Medium Enterprise Agency has published the report of the "Study Group on the Ideal Form of Startup Policies for Sustainable Regional Growth", which has been meeting since December 2025 to discuss the future direction of policies; the report examines the current state of entrepreneurship and outlines future strategies for regional economic growth; statistics reveal that Japan’s business opening rate remains significantly lower than that of the United States and United Kingdom, primarily due to a lack of interest in starting new ventures; to combat this, the report proposes shifting focus from initial startup support to long-term growth during a company's first five years; key initiatives include cultivating a supportive regional ecosystem, enhancing digital literacy through AI training, and improving access to diverse financing options; the government aims to stabilize the number of new founders at 100,000 annually while doubling the number of regions with high entrepreneurial activity within five years; ultimately, these measures seek to drive industrial renewal and address labor shortages by fostering high-quality business development
• METI & NEDO publish updated "Carve-Out Practice Guidance Guidebook": the Ministry of Economy, Trade and Industry (METI) and the New Energy and Industrial Technology Development Organization (NEDO) have published an update to their "Carve-Out Practice Guidance Handbook", originally released in 2024; the handbook serves as a strategic manual for executing entrepreneur-led carve-outs in Japan and is divided into two primary sections; the first explains the strategic necessity for parent companies to spin off internal projects to foster rapid growth; the second part provides a practical roadmap for aspiring entrepreneurs, focusing on the tactical "how-to" of navigating complex internal corporate structures; key areas of focus include managing intellectual property transfers, establishing independent governance, and securing venture capital financing while maintaining healthy relationships with the original firm; furthermore, the text outlines essential personnel policies and capital structures designed to ensure the new startup remains competitive and autonomous; ultimately, the sources aim to transform underutilized corporate assets into high-potential ventures through structured collaboration and specialized decision-making
• Japan’s "Regional Future Strategy": the Cabinet Secretariat hosted the "Second Meeting of the Vice Ministers and Other Officials on Regional Future Strategies" in March, a further step towards the publication of the "industry cluster plans" expected during June; this "Strong Economy" initiative is moving Japan from conceptual regional revitalization to a disciplined, execution-oriented industrial architecture; led by Minister Hitoshi Kikawada and Vice-Minister Tsushima, the "Regional Future Strategy" marks a definitive departure from traditional "aid-based" regionalism—which historically subsidized economic decline—toward a "growth-based" model centered on 17 strategic industrial clusters; the core objective is the integration of regional production capabilities into global supply chains to secure national GDP growth and technological sovereignty; the March meeting finalized the "Basic Concept" for three distinct frameworks: "Strategic Industry Cluster Plans," "Regional Industry Growth Plans," and "Local Industry Growth Plans."
• Itochu Research Institute - Japan’s economic crossroads, navigating geopolitical shocks and structural labor shifts: Japan currently navigates a volatile economic landscape where immediate geopolitical shocks from the February 2026 US-Israel-Iran conflict intersect with a fundamental, long-term restructuring of the domestic labor market; the imperative for institutional investors lies in deciphering the disconnect between "Boardroom" resilience and a "Street-Level" sentiment collapse; while the 5% Shunto wage growth threshold—a figure achieved for the third consecutive year—suggests a transition toward a virtuous price-wage cycle, the internal distribution of these gains is uneven; external energy-driven inflation (cost-push) is colliding with a "flattening" of the traditional seniority-based wage curve, where scarcity-driven premiums for younger workers are being financed by the devaluation of mid-to-late career earnings; understanding how these internal structural pivots interact with the conflict-induced energy surge is essential for assessing Japan's 2026 growth trajectory

Capital Markets

• Nomura achieves record net revenue on global expansion and asset management pivot: Nomura has delivered a robust set of financial results for the fiscal year ended March 31, 2026, marking a critical step in the firm’s long-term transformation under President and Group CEO Kentaro Okuda; in a period characterized by sharp global market volatility, Nomura has managed to scale its top-line while maintaining structural profitability; these results reflect a deliberate transition from its traditional brokerage roots toward a diversified, globalized fee-based model, anchored by the formal integration of its new Banking division and the scaling of its investment management platform
• JSCC leverages Canton Network to pioneer 24/7 real-time collateral settlements: the Japan Securities Clearing Corporation (JSCC) is moving to modernize the architectural backbone of Japanese finance, announcing a strategic initiative to implement a blockchain-based settlement layer. In collaboration with Mizuho, Nomura, and technology partner Digital Asset, the JSCC is transitioning toward a more resilient, instantaneous clearing environment; by utilizing the Canton Network, JSCC aims to move beyond traditional operating hours to achieve 24/7 real-time collateral settlements; this digital transformation streamlines the flow of book-entry transfer records between direct participants and indirect participants, both within Japan and across international markets
• Mizuho Securities taps Behavox AI to overhaul global communications surveillance: Mizuho Securities, the brokerage arm of Mizuho Financial Group, has deployed a new artificial intelligence-powered communications monitoring system provided by London-based tech firm Behavox; the move marks a broader push among Tier 1 Japanese financial institutions to replace fragmented compliance tools with integrated, AI-native frameworks; the newly implemented system, Behavox Quantum, is a SaaS-based surveillance solution designed to monitor internal employee communications across platforms such as email and chat; the system is equipped to analyze data consistently across multiple languages, including Japanese and English, providing end-to-end traceability from the initial detection of a risk to its resolution
• Morningstar's Japan ETF market Q1 2026 flow analysis: the Japanese ETF market ended a grueling three-quarter streak of net outflows with a commanding recovery; total net inflows surged past the ¥1 trillion threshold, lifting total assets under management (AUM) to ¥116 trillion—a notable jump from the ¥112 trillion recorded at the end of 2025; this resurgence is a critical indicator of investor sentiment across the broader Asian landscape; rather than retreating from the market soft patch in March, capital allocators demonstrated highly opportunistic behavior, using the ETF vehicle’s liquidity to execute "buy the dip" strategies during localized corrections; beneath this headline snapback, the market plumbing reveals a sophisticated rotation into yield-sensitive sectors and defensive commodities
• Evaluating the efficacy of Tokyo Stock Exchange extended trading hours and closing auction reforms: on November 5, 2024, the Tokyo Stock Exchange (TSE) extended the trading day to 15:30 and implementing a formalized closing auction; this transition was designed to enhance global competitiveness and accommodate the liquidity requirements of passive investment strategies; by extending the trading window, the TSE has effectively minimized the gap between domestic price discovery and international news cycles, facilitating more robust institutional participation; for institutional stakeholders, these reforms address the structural alpha associated with end-of-day liquidity; the extension provides a safety net for execution, particularly for index-tracking funds that must manage tracking error through precise closing-price execution; the data evaluated for this report confirms a significant shift in liquidity provision profiles
• The Ministry of Finance has published its "JGB Newsletter" for April 2026
• The Tokyo Stock Exchange has published "Beyond Borders - An Introductory Handbook: From Market Entry in Japan to Cross-Border IPOs on the TSE"; this handbook is intended for overseas companies and relevant practitioners considering business expansion into Japan and/or a listing on the TSE; it systematically outlines the procedures required to start a business operations in Japan, as well as the key requirements and points to consider when seeking a listing on the TSE

Digital Assets

• DCJPY trial launches new era - tokenized deposits in security settlement: on April 24, 2026, a consortium of six financial and technology leaders—including SBI Securities, Daiwa Securities, and SBI Shinsei Bank—announced the successful completion of Japan’s first "Delivery Versus Payment" (DVP) settlement for security tokens using "DCJPY" tokenized deposits; the verification, concluded in March 2026, utilized actual ST corporate bonds and tokenized currency rather than simulations; this milestone proves the technical viability of an atomic settlement architecture where the transfer of assets and cash occurs simultaneously, effectively eliminating the counterparty risks that have historically hindered the growth of the ST secondary market
• SBI VC Trade has added Algorand (ALGO) to the list of cryptocurrencies available for staking on the VCTRADE service, the first time Algorand (ALGO) is being offered for staking in Japan; currently, SBI VC Trade offers staking services for 17 cryptocurrencies
• Credit Saison and Coincheck to integrate crypto assets into consumer credit services: Credit Saison and Coincheck have entered into a business alliance agreement to lower the barrier to entry for digital asset investment by integrating cryptocurrency services into the daily financial routines of Credit Saison’s extensive cardholder base; the collaboration is designed to address the persistent hurdles of market volatility and technical complexity that have historically limited the adoption of crypto assets among mainstream Japanese consumers; by leveraging Credit Saison’s established financial infrastructure and Coincheck’s digital asset platform, the companies intend to create an environment where users can engage with cryptocurrencies as a natural extension of their existing financial habits
• Leveraging the TMG digital securities subsidy for high-value token issuance: the Tokyo Metropolitan Government’s (TMG) "Digital Securities Market Expansion Promotion" project provides a window for firms to lead the structural shift from "Savings to Investment"; as Tokyo aggressively pursues its mandate to become Asia's preeminent innovation and financial hub, this project provides the subsidized infrastructure required to implement Security Tokens (STs); by utilizing blockchain to bypass legacy constraints, issuers can forge a direct, high-alpha connection with a broader investor base, aligning corporate growth with Tokyo’s digital financial evolution
• Nomura & Laser Digital have published their "Institutional Investor Survey on Digital Asset Investment Trends" for April 2026

The Last Word: Energy Dependency

The first chart, from BlackRock, shows the share of energy (crude oil and liquefied natural gas) imported via the Strait of Hormuz by country, and the second chart, from Apollo, shows the jet fuel dependency.

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