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Japan FinTech Observer #105

Norbert Gehrke

Norbert Gehrke

— 10 min read
Japan FinTech Observer #105
Cutting through the noise in Japanese Finance & FinTech

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

Happy new fiscal year! There were a few deals that still had to get done before the end of March, with insurance and regional banking being especially busy.

Congratulations and best of luck to anyone who started a new job and/or role on April 1!

Here is what we are going to cover this week:

  • Venture Capital & Private Markets: Coral Capital, Cherubic Ventures, Global Brain, NEA, and Plug and Play Japan have invested JPY 200m in Tokenz; Lazarus AI has successfully secured participation from AllegisNL Capital into its convertible note financing; INCJ terminates operations
  • Insurance: the FSA has issued business improvement orders to four non-life insurance companies due to customer information leakage; MS&AD Insurance Group will merge Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance by April 2027; MS&AD Insurance Group to take stake in W. R. Berkley Corporation
  • Banking: SMBC's "Olive" has surpassed 5m accounts; Chiba Bank acquires stake in Chiba Kogyo Bank; Shizuoka Bank, Yamanashi Chuo Bank, and Hachijuni Bank create "Mt. Fuji & Alps Alliance"
  • Payments: Circle's partnerships include a joint venture with Japanese financial conglomerate SBI Holdings, with SBI VC Trade initiating a full-scale launch of USDC on March 26, alongside plans by leading exchanges Binance Japan, bitbank, and bitFlyer to list and distribute USDC in the near future; Revolut Technologies Japan has launched a new service targeting children and teenagers aged 6 to 17; JR Shikoku, Toyo Denki Seizo, and DG Financial Technology have enabled QR code-based payment acceptance for conductors; OwlTing Group partners with GMO-Z.com Trust Company to enhance the accessibility to GYEN, the first regulated Japanese Yen stablecoin
  • Capital Markets: JERA, EDF Trading and JERA Global Markets announced the expansion of JERAGM’s remit by its shareholders to include Japanese power trading
  • Asset Management: GPIF leaves the policy asset mix for the next medium-term plan unchanged
  • Digital Assets: the FSA plans to revise the Financial Instruments and Exchange Act to give crypto assets a legal status as financial products; in addition to Bitcoin and Ethereum, Open House now accepts XRP, SOL (Solana), and Doge (Dogecoin) for property transactions
  • The Last Word: Japan Economic Outlook March 2025

Guidelines for Practical Use of Data Using Secure Computation

NTT Communications, the National Institute of Advanced Industrial Science and Technology (AIST), Nomura Research Institute, NRI Secure Technologies, and GMO CyberSecurity by Ierae have published the interim report on the "Guidelines for Data Utilization Using Secure Computation." The aim is to promote the understanding and utilization of secure computation to facilitate data sharing and utilization while addressing privacy and security concerns.

The guidelines are structured into three main parts:

  1. General Overview: Provides the overall structure of the guidelines and fundamental knowledge about secure computation, its position within Privacy-Enhancing Technologies (PETs), and introduces potential use cases. This blog post covers the general overview.
  2. Realization Process for Secure Computation Projects: Focuses on project management, processes, and existing examples for sharing and utilizing personal data using secure computation (specifically those employing secret sharing). The intended audience is project managers and those responsible for such initiatives.
  3. Data Management and Security in Secure Computation: Discusses the legal status of secure computation in Japan and the requirements for system providers to securely manage data within secure computation systems. This section is aimed at providers and those evaluating the security of these systems.

Venture Capital & Private Markets

  • Coral Capital, Cherubic Ventures, Global Brain, NEA, and Plug and Play Japan have invested JPY 200m in Tokenz, a company providing next-generation payment gateway solutions; Tokenz supports digital content businesses such as games, e-books, software, and streaming platforms by offering a Merchant of Record (MoR) solution that enables seamless and flexible global expansion, supporting over 200 payment methods across 170 countries and regions
  • Lazarus AI has successfully secured participation from AllegisNL Capital into its convertible note financing; AllegisNL Capital is a venture capital fund supported by Nippon Life Group, investing in innovative companies at the intersection of technology and insurance or adjacent industries; AllegisNL Capital expects Lazarus AI's technology to further expand its reach into the Japanese insurance market
  • INCJ terminates operations: INCJ was established in September 2018 via company split from Innovation Network Corporation of Japan (INCJ); INCJ was established in July 2009 with the aim of overcoming boundaries between companies and industries, creating and nurturing key industries via open innovation for the prosperity of future generations, and providing risk capital post-Lehman bankruptcy; INCJ has also completed the recovery process for various LP investments

Insurance

  • The Financial Services Agency (FSA) has issued business improvement orders to four non-life insurance companies, namely Tokio Marine & Nichido Fire Insurance, Aioi Nissay Dowa Insurance, Sompo Japan Insurance, and Mitsui Sumitomo Insurance, pursuant to Article 132, Paragraph 1 of the Insurance Business Act concerning incidents of customer information leakage
  • MS&AD Insurance Group announced that at the Board of Directors meeting held on March 28, 2025, it was decided to proceed with specific discussions and preparations for the merger of two core non-life insurance companies within the group, Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance; the target date for this merger is set for April 2027
  • MS&AD Insurance Group to take stake in W. R. Berkley Corporation: Mitsui Sumitomo Insurance (MSI) is entering into agreements with the founding family of W. R. Berkley (WRB) which entail an investment by MSI in shares of outstanding WRB common stock; WRB is a Fortune 500 Company and a leader in specialty insurance lines in the commercial and select parts of the specialty consumer space; MSI will enter into agreements with the family, which entails MSI purchasing 15% of the outstanding common stock of WRB and the family recommending to WRB Board’s Nominating and Corporate Governance committee an MSI designee to be elected to the WRB Board of Directors; all common stock will be purchased through open market or private block purchases; the family will not be selling any of its common stock to MSI nor will MSI be purchasing any common stock from WRB
  • Assessing Prudential Insurance Regulation in Japan: this "Standard Formula" podcast episode by Skadden delves into the intricate landscape of prudential insurance regulation in Japan, a topic gaining traction due to its significant impact on the burgeoning reinsurance market; as part of a year-long series exploring global solvency requirements, the discussion is anchored by Japan's position as the fourth-largest insurance market worldwide, holding a 5% global share and generating premiums of $363 billion in 2024; historically dominated by life insurance, Japan's market is witnessing increased competition with the influx of foreign insurers, further fueled by ongoing regulatory reforms aimed at bolstering financial stability and aligning with international standards like Solvency II and the IAIS Insurance Capital Standard (ICS)

Banking

  • Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Card Company announced that the number of accounts opened for "Olive" has surpassed 5 million; in the two years since the service began, Olive has been working with top players in various industries beyond the SMBC Group; in addition to these business partnerships, Olive has been continuously updating its functionality, including the "Fixed Amount Automatic Deposit Service," which allows automatic deposits from accounts at other banks to an Olive account, and the "Payment Mode Addition Service," which allows customers to add up to five credit cards; also, the new Olive LOUNGE, which combines a bank, cafe and office, has three branches in Tokyo, and is scheduled to open in Osaka in April
  • Chiba Bank acquires stake in Chiba Kogyo Bank: Chiba Bank has determined, through a resolution of the Board of Directors las week, to acquire the shares of Chiba Kogyo Bank from Ariake Master Fund, and it has entered into a share purchase agreement with Ariake in connection with the Share Acquisition; the combination of Chiba Bank and Chiba Kogyo Bank would form the second-largest regional banking group, only eclipsed by Fukuoka Financial Group; Chiba is one of the rare prefectures still host to three or more regional banks - Keiyo Bank is the third
  • Shizuoka Bank, Yamanashi Chuo Bank, and Hachijuni Bank create "Mt. Fuji & Alps Alliance": Shizuoka Bank and Yamanashi Chuo Bank launched the "Shizuoka-Yamanashi Alliance" in October 2020, and have been working to achieve sustainable growth in their regions and expand revenue opportunities through resolving social issues, while mutually utilizing each bank's strengths and management resources; meanwhile, Hachijuni Bank, the leading bank in Nagano Prefecture, which borders Shizuoka and Yamanashi Prefectures, shares many commonalities in terms of regional characteristics and social issues; the banks have been sharing awareness of challenges faced by their regions and customers, and have been examining possibilities for specific collaboration; Hachijuni Bank made Nagano Bank a wholly owned subsidiary in June 2023, and plans to merge with it in January 2026, becoming the only bank in the prefecture
  • European credit specialist AlbaCore Capital Group, a consolidated subsidiary of Mitsubishi UFJ Trust and Banking Corporation (MUTB), has launched a new Senior Direct Lending Strategy, having secured anchor investments from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and MUTB

Payments

Source: METI
  • According to the Ministry of Economy, Trade and Industry (METI), the cashless payment ratio for 2024 has come in at 42.8%
  • Circle announced its deepened commitment to Japan by leveraging its Japanese entity, Circle Japan KK, and local partnerships to drive the adoption of Circle platforms and technologies in Japan; Circle’s partners in Japan will leverage Circle’s platforms to enable the adoption of USDC in Japan; these partnerships include a joint venture with Japanese financial conglomerate SBI Holdings, with SBI VC Trade initiating a full-scale launch of USDC on March 26, alongside plans by leading exchanges Binance Japan, bitbank, and bitFlyer to list and distribute USDC in the near future
  • Revolut Technologies Japan has launched a new service targeting children and teenagers aged 6 to 17, designed to help them learn financial literacy in a gamified way through daily life experiences; by using separate apps for parents and children, the service provides features that allow learning about money management through communication; its key characteristics include complete digitalization of pocket money management suited to the cashless era and high international capabilities for managing expenses during overseas travel or study abroad, while allowing parents to respect their children's autonomy and provide appropriate spending guidance
  • JR Shikoku, Toyo Denki Seizo, and DG Financial Technology have equipped the "On-board Supplementary Ticket Issuance App" used by conductors with QR code payment functionality starting April 1, 2025; the implementation of QR code payment for on-board supplementary ticket purchases is a first for JR companies
  • SBI Holdings will open the "SBI FinTech Center OSAKA" at the innovation support facility "JAM BASE" in the Umekita district on April 1st; SBI Holdings has been collaborating with Osaka Prefecture and City to realize the International Financial City concept through various initiatives, including: (I) providing advisory services, (II) assisting in attracting overseas companies, (III) sponsoring the Osaka-Kansai Expo, and (IV) promoting digital regional currency initiatives in the Osaka region
  • OwlTing Group partners with GMO-Z.com Trust Company to enhance the accessibility to GYEN, the first regulated Japanese Yen stablecoin; this strategic move aims to provide users with diversified cross-border transaction options in one of the world’s major reserve currencies; by integrating GYEN and ZUSD (USD stablecoin) into OwlTing's digital wallet, OwlPay® Wallet Pro, OwlTing will bridge traditional and digital finance, enabling businesses and individuals to leverage stablecoins for fast, low-cost global payments

Capital Markets

Asset Management

GPIF policy asset mix for the next medium-term plan
  • GPIF policy asset mix for the next medium-term plan: the target allocation remains the same as in the fourth medium-term objectives period, for the reason that GPIF selected a portfolio that achieves the real investment return of 1.9% (nominal investment return minus nominal wage growth) at the minimum risk after estimating the expected return of each asset based on the fiscal 2024 financial verification, and changing the calculation and updating the data with regard to the risks of different assets and the correlation between them

Digital Assets

The Last Word: Japan Economic Outlook March 2025

The SOMPO Institute Plus, the think tank of SOMPO Group, has published its quarterly outlook for the Japanese economy.

The report anticipates a continuation of moderate economic growth, driven by gradually improving real wages and solid corporate performance supporting business investment.

However, external demand is expected to remain weak due to a slowdown in the global economy, particularly in the US and China. Inflation, as measured by the core CPI, is projected to decelerate over the forecast period.

The outlook includes upward revisions for FY2024 GDP and CPI compared to the previous forecast (December 2024), but downward revisions for FY2025 GDP and upward revisions for FY2025 CPI.

Key risks to the main scenario include an escalation of global trade wars and a sharp rise in domestic long-term interest rates, while upside risks involve an earlier-than-expected easing of goods price inflation and stronger wage growth in FY2026.

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