Japan FinTech Observer #168

Welcome to the one hundred sixty-eighth edition of the Japan FinTech Observer. This week, we are excited to have new subscribers join us from BlackRock, DZ BANK AG, the Kazakhstan Stock Exchange, Bangko Sentral ng Pilipinas, and Rakuten, among others 🙏

The Bank of Japan concluded its June Monetary Policy Meeting today (June 16). Please allow me to quote UBS' Chief Economist Paul Donovan: "As expected, the Bank of Japan raised rates to 1%, a level last seen in the distance past of 1995. This was a different move from the recent ECB policy error—unlike Europe, Japan began the year with an accommodative monetary stance. The rate increase is part of a process of returning to neutral, and is broadly considered appropriate." In line with the leaks from last week, the Bank of Japan will also stop the reduction in monthly JGB purchases at JPY 2trn starting in April 2027. It expects its March 2030 JGB holdings to be approximately 36 to 39% below the June 2024 level, when the tapering started.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: ITFOR partners with SOURCING BROTHERS to form new venture growth investment subsidiary; Vinyl Equity secures USD 20m Series A with backing from MUFG Innovation Partners; tech giants team up for USD 500m venture to Fuel "IOWN" distributed optical AI infrastructure; cracks in the unlisted equity market - FUNDINNO's Q2 slump and the radical pivot to M&A
• Insurance: InsurTech leader Hokan Group establishes research arm 'hal' targeting longevity and next-gen social challenges; Apollo Global Management is pursuing direct access to Japan’s life insurance market
• Banking: KDDI board greenlights IPO preparations for au Financial
• Payments: Japanese megabanks establish consortium to roll out shared stablecoin by FY2026; Digital Garage and Resona enhance medical payment platform "CurePort" with automated receipt and billing data features
• Capital Markets: Japan’s SESC recommends administrative penalties for Moomoo Securities over NISA violations and systemic failures; Carbontribe Labs and J-POWER validate AI-driven data infrastructure for institutional-grade natural capital investments; inside the Growth Market - the 28th "Council of Experts Concerning the Follow-up of Market Restructuring"
• Digital Assets: Metaplanet announced its intention to acquire Siiibo Securities
• The Last Word: Digital Government

Venture Capital & Private Markets

• ITFOR partners with SOURCING BROTHERS to form new venture growth investment subsidiary: ITFOR (TSE: 4743) has entered into a basic agreement to establish a joint venture with corporate growth advisory firm SOURCING BROTHERS; the new subsidiary, tentatively named ITFOR Growth Capital, is scheduled for establishment in July 2026 and aims to aggressively accelerate the company’s long-term inorganic growth strategy; the move directly aligns with ITFOR’s long-term vision, "HIGH FIVE 2033," which targets net sales of JPY 70 billion by fiscal year 2033; while ITFOR maintains strong revenue infrastructure in system development and operations across banking, local government, and cashless payment sectors, management acknowledged that achieving its JPY 70 billion target requires capturing discontinuous growth opportunities via structured M&A, business alliances, and corporate venture capital (CVC) investments
• Vinyl Equity secures USD 20m Series A with backing from MUFG Innovation Partners: Vinyl Equity, a Chicago-based financial technology infrastructure provider and SEC-registered transfer agent, has raised $20 million in a Series A funding round; the round was led by Jump Capital, with prominent strategic participation from MUFG Innovation Partners (MUIP), the corporate venture capital arm of Mitsubishi UFJ Financial Group; the financing also saw continued support from previous backers, including Index Ventures, Spark Capital, Infinity Ventures, and Cambrian Fintech
• Tech giants team up for USD 500m venture to Fuel "IOWN" distributed optical AI infrastructure: In a major cross-border play to anchor the next generation of artificial intelligence, a consortium of global technology and financial leaders announced the creation of the IOWN AI Fund; backed by telecom and technology heavyweights including NTT, SK Group, and Chunghwa Telecom, alongside the Development Bank of Japan (DBJ) and veteran Silicon Valley investor Young Sohn, the fund is targeting a total size of approximately US$500 million (¥80 billion); more than 20 companies worldwide have already signaled their intent to participate as investors
• Cracks in the unlisted equity market - FUNDINNO's Q2 slump and the radical pivot to M&A: FUNDINNO reported earnings for the second quarter of its fiscal year ending October 2026, covering its key performance indicators, specifically highlighting the growth in gross merchandise value (GMV) and the expanding number of registered professional investors across its primary and secondary equity platforms; however, due to a challenging startup investment environment and shifting market conditions, the firm has issued a significant downward revision to its full-year earnings forecast; this financial adjustment includes the write-down of deferred tax assets and a projected net loss for the period; to address these difficulties and demonstrate accountability, the company's representative directors have committed to a voluntary reduction in their executive compensation; moving forward, FUNDINNO plans to accelerate strategic initiatives aimed at diversifying exit opportunities and strengthening its equity platform for unlisted companies

Insurance

• InsurTech leader Hokan Group establishes research arm 'hal' targeting longevity and next-gen social challenges: Hokan Group, a holding company specializing in insurance technology and solutions, has established a new Discover & Research (D&R) and generative research institution, "hal (hokan advanced lab)"; the Tokyo-based company operates a portfolio of subsidiaries, including "hokan," a provider of cloud-based CRM software for the insurance sector; "CIEN," a professional service firm catering to insurance companies; and "Frich," a platform designed for alternative compensation architecture; according to Hokan Group, the launch of hal is driven by structural shifts in society that present challenges beyond the scope of traditional actuarial science; the research institution will focus on cross-disciplinary fields, specifically targeting declining birthrates, population aging, increased longevity, and emerging risks associated with artificial intelligence (AI) and cyber threats
• Apollo Global Management is pursuing direct access to Japan’s life insurance market through acquisitions after encountering regulatory resistance over at least one proposed deal; the US asset manager held discussions to acquire two subsidiaries of T&D Holdings – Taiyo Life and T&D Financial Life (TDFL) – as well as a life insurance unit belonging to Japanese investment firm ORIX Group, with the latter talks described as being at an early stage, the Financial Times reported; Apollo’s bid for TDFL failed; SoftBank-owned payments company PayPay announced last week that it would acquire the entity instead

Banking

• KDDI board greenlights IPO preparations for au Financial: Telecommunications giant KDDI Corporation (9433.T) has resolved to commence preparations for listing its consolidated financial subsidiary, au Financial Holdings (auFH), on the Tokyo Stock Exchange; the decision marks a significant milestone for the KDDI Group, which first entered the digital banking sector in 2008 with a mobile-focused online bank before consolidating its FinTech operations under the au Financial Group banner in 2019; since then, the company has aggressively pursued a strategy of integrating core telecommunications with value-added financial services

Payments

• Japanese megabanks establish consortium to roll out shared stablecoin by FY2026: The nation’s three banking giants—Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation (SMBC)—announced today a formal agreement to fast-track the commercial launch of a jointly issued stablecoin; the megabanks aim to initiate live, practical transactions using the new digital asset within fiscal year 2026; under the framework, the three banks will act as co-settlors, with the stablecoins issued via trust agreements utilizing trust banks as trustees; to ensure a smooth rollout, the institutions have signed a basic agreement to establish a dedicated council; this new body will oversee operations, establish governance structures, and design the overall scheme and issuance infrastructure
• Digital Garage and Resona enhance medical payment platform "CurePort" with automated receipt and billing data features: FinTech and marketing firm Digital Garage (TSE Prime: 4819) has announced a significant feature expansion for "CurePort," an online medical payment service co-operated with Resona Holdings (TSE Prime: 8308); the upgrade deepens the platform's integration with "WebORCA Cloud," a widely adopted medical billing software provided by the ORCA Management Organization of the Japan Medical Association; the expansion introduces an automated "Receipt and Statement Data Return Function" designed to eliminate patient wait times and optimize administrative workflows in healthcare facilities

Capital Markets

• Japan’s SESC recommends administrative penalties for Moomoo Securities over NISA violations and systemic failures: Japan’s Securities and Exchange Surveillance Commission (SESC) has recommended administrative action against Tokyo-based Moomoo Securities; the recommendation, submitted to the Prime Minister and the Commissioner of the Financial Services Agency (FSA), follows an agency investigation that uncovered severe compliance breaches, misleading retail practices, and systemic operational deficiencies at the online brokerage; an SESC inspection revealed that between February and May 2025, the broker mislabeled 77 non-eligible US ETFs and ETNs as NISA-compliant on its platform due to a lack of internal controls and an inadequate understanding of tax regulations; this led to 59 clients mistakenly executing trades through tax-exempt accounts
• Carbontribe Labs and J-POWER validate AI-driven data infrastructure for institutional-grade natural capital investments: Carbontribe Labs, a Japanese-founded and Estonia-based environmental data and API platform provider, has partnered with Japanese utility major J-POWER (Electric Power Development) to validate a new data infrastructure aimed at elevating natural capital data to institutional investor standards; the joint initiative leverages artificial intelligence and blockchain technology within J-POWER’s Oil Palm Trunk (OPT) derived biomass fuel business
• Inside the Growth Market - the 28th "Council of Experts Concerning the Follow-up of Market Restructuring": The recently held Market Restructuring Council discussed the findings of a 2026 survey conducted by the Tokyo Stock Exchange to identify the primary hurdles facing companies in the Growth Market; data gathered from 145 organizations reveals that while business strategy and resource shortages are significant concerns, the most pressing issues involve investor relations and market valuation; many firms struggle with low stock liquidity, a lack of access to institutional investors, and share prices that fail to reflect their actual progress; to address these gaps, respondents requested more practical seminars, sector-specific best practice case studies, and better networking opportunities with peer companies; ultimately, the report highlights a broad need for management mindset shifts regarding capital efficiency and more robust support systems to enhance the long-term appeal of the Growth Market

Accessing Standard & Growth Market Segment Company Information

Japan’s primary exchange, the Tokyo Stock Exchange, lists roughly 3,900 companies, making its raw number of listings significantly higher than any single U.S. exchange. However, combined, the U.S. markets (NYSE and Nasdaq) hold roughly 5,600 unique listings. While Japan's count is dense relative to its economy, U.S. exchanges boast a much larger combined market capitalization.

Only a handful of these companies are covered by sell-side analysts, even in Japanese. This presents a challenge both ways - first, international investors looking for institutional-grade research find it difficult to gather fundamental data, and develop an investment thesis around a specific name; second, as also mentioned in the TSE's growth market survey outlined above, smaller market cap companies who wish to develop better relationships with international investors, often do not know how to approach the global market.

I would like to share a few approaches that have been successful, at different stages of maturity.

• Amir Hoosain has developed a spiffy visualization tool for Asian markets, the "Asian Equities Navigator" - it is intuitive to use, so have a go at applying some filters and see what insights it can generate for you
• Matt Helmer is building "Japan Finsight" and implements the Model Context Protocol (MCP), an open standard for AI agents to call structured tools and read structured data; once connected, your AI agent can query Japan's official corporate disclosure data (EDINET) the same way it queries any other tool
• There is Smartkarma, obviously, which requires a subscription, but has some true professionals on the platform, many having worked in institutional research previously; I would like to highlight Mike Allen, whose specialty are distressed situations
• For Japanese small- and mid-cap stocks looking for global investor exposure and English language investor relations support, there is "sponsored research"; companies like Sessa Partners (Hitoshi Sugibuchi), for example, provide fact-based institutional-grade research, typically without the ratings and price targets; the reports can also be a great resource for those looking for an investment narrative

If you use alternative approaches, please do not hesitate to share - we would be happy to collate and publish back to our community.

Digital Assets

• Metaplanet announced its intention to acquire Siiibo Securities, a specialized Japanese firm focused on corporate bonds, for JPY 2.1 billion; this strategic move is the first major acquisition under Project Nova, a long-term plan to establish a comprehensive financial ecosystem centered on Bitcoin; by integrating a licensed Type I Financial Instruments Business Operator, Metaplanet aims to develop innovative BTC-linked financial products and digital securities for its large investor base; upon completion of the deal, the subsidiary will be rebranded as Metaplanet Securities to reflect its new role in bridging traditional finance with digital assets; the purchase is being funded through cash reserves and credit lines, signaling the company's commitment to becoming a global leader in the corporate Bitcoin treasury space

The Last Word: Digital Government

Readers will remember my fondness for the accomplishments of the Digital Agency, Government of Japan. While I will admit that much could have been achieved much earlier, the progress over the past years has been remarkable. With the OECD's "Digital Government Outlook 2026" published this week, I now have data to support that view, please see the chart above - any country to the right of Japan, except for Costa Rica, was ahead of Japan in 2023. That is a nice leap!

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