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Japan FinTech Observer #109

Norbert Gehrke

Norbert Gehrke

— 11 min read
Japan FinTech Observer #109

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

We are entering our own Japanese-style "triple witching" week. First, Golden Week has started, typically a good time to stay pat in Tokyo when everyone is traveling. However, travel has become expensive for Japanese residents, and the large numbers of tourists will not allow for some solitude. Second, earnings season has begun, although the largest part of market capitalization will report between May 8 to 15. Lastly, it is time for the next Bank of Japan Monetary Policy Meeting! Again, no change in the policy rate is expected. Reasons include a reduced growth forecast for Japan (down 0.5 percentage points for 2025 - see "The Last Word"), and the recovery of the Japanese Yen from its 160 JPY/USD low point, despite the Tokyo CPI coming in at over 3.1% which would allow for claims of "the BOJ is falling behind".

Here is what we are going to cover this week:

  • Venture Capital & Private Markets: Alpaca announced its USD 52m Series C; Hana Network has raised an additional JPY 300m; SMBC has established a secondary fund to support the sustainable growth of startups; JAFCO has divested its Asia portfolio to Bee Alternatives; TDK Ventures has launched Fund 3; Incubate Fund is preparing to kick off fundraising for its fourth India-focused fund
  • Insurance: KYOBO Life Insurance is in the final stages of negotiation with Japanese financial group SBI Holdings to buy about a 50% stake in SBI Savings Bank; Guidewire announced a $60 million investment over the next five years to expand its operations in Japan
  • Banking: The Gunma Bank and Daishi Hokuetsu Financial Group will "integrate", forming potentially the third-largest regional banking group; MUFG Bank selects Databricks and Oracle as key infrastructure vendors; FPT Corporation announced a strategic partnership with Sumitomo Corporation and SBI Holdings
  • Payments: Stripe is adding PayPay online payments; Progmat has commenced Phase 2 practical verification for "Project Pax," aimed at building a cross-border remittance infrastructure using stablecoins
  • Capital Markets: Nomura reports full-year results; the Tokyo Stock Exchange convened a study group dedicated to exploring the reduction of investment unit; Smartround, with the aim of building a platform to optimize secondary trading of stocks issued by unlisted startups, is preparing for launch
  • Asset Management: Nomura to acquire Macquarie’s U.S. and European public asset management business, with approximately US$180 billion in retail and institutional client assets; Asset Management Nation 2.0
  • Digital Assets: Cantor nears $3 billion crypto venture with SoftBank and Tether; Saison Capital, BRI Ventures, and Coinvestasi have officially launched Tokenize Indonesia, a new accelerator program; BOOSTRY has begun offering "E-Prime for IR"; Quick launches JPY-denominated Bitcoin Index
  • The Last Word: The IMF's Updated Economic Forecast

Venture Capital & Private Markets

  • Alpaca announced its $52 million Series C funding round from its new office in Manhattan, New York; this round saw participation from both new and returning investors, including Derayah Financial, 850 Management, National Investments Company (NIC), Unbound, and Portage Ventures; the participation of returning investors underscores their continued confidence in Alpaca's vision and execution; with this raise, Alpaca sets its sights on continued global expansion, serving both enterprise institutions and fintechs across key regions like the US, the Middle East, and Asia
  • Hana Network, which enables cryptocurrency and fiat currency transactions without the need for exchanges, has raised an additional 300 million yen from investors across different countries in April 2025 in preparation for its upcoming product launch, bringing the total amount raised to approximately 900 million yen

Funds

  • SMBC's support for startup exits: last week, SMBC Group made two announcements concerning their support for startup exits; (I) Sumitomo Mitsui Banking Corporation and FOR STARTUPS have begun a collaboration aimed at diversifying exit strategies for startups; and (II) Sumitomo Mitsui Banking Corporation, SMBC Venture Capital Management, and Bee Alternatives Japan have established a secondary fund to support the sustainable growth of startups
  • Bee Alternatives Management (BAM), the equity holding company of Bee Alternatives Limited (BAL), has entered into a definitive agreement to acquire 100% of the shares in JAFCO Investment (Asia Pacific) from JAFCO Group as part of a strategic initiative to expand its platform and investment capabilities in Asia; following completion of the Acquisition, BAM will directly or indirectly hold the shares of the General Partner and the Manager of the relevant funds
  • TDK Ventures has launched Fund 3, a $150 million commitment to catalyzing the next generation of iconic deeptech startups; building on Fund 1, Fund 2 and Fund EX1, this milestone increases TDK Ventures’ total assets under management to $500 million, reinforcing its position as a global leader in early-stage impact investing
  • Tokyo-headquartered Incubate Fund is preparing to kick off fundraising for its fourth India-focused fund with a target corpus of $50-75 million by the end of this year, Partner Nao Murakami told DealStreetAsia in an interview (paywall)

Not FinTech

  • RightTouch has completed a Series A funding round totaling over 800 million yen through third-party allotment to Global Brain Corporation and GMO VenturePartners, as well as loans from Shoko Chukin Bank; since launching "RightSupport by KARTE" in March 2022—a web support platform that analyzes and detects customer behavior in real-time before inquiries and guides them to appropriate channels with no coding required—the company has released four products and generative AI function groups to optimize the customer support experience and overall business workflows; the business began with adoption in the financial industry
  • Sports Tech Company Euphoria Raises Funding Through Impact Investment from SMBC Venture Capital: Euphoria will deliver the conditioning improvement methods developed for athletes to corporate employees and the general public, utilizing the power of sports to maintain an aging society in a healthy and sustainable manner
  • NEC Corporation has invested in the "Geodesic Alliance Fund", a fund managed by the U.S. venture capital firm Geodesic Investments, with the aim of strengthening its business in the area of economic security, including space, submarine cables, cyber security and national defense

Policy

Insurance

Banking

  • The Gunma Bank and Daishi Hokuetsu Financial Group have reached a memorandum of understanding aimed at realizing a business integration based on a basic policy of mutual trust and an equal integration; such "integration" will take the form of repurposing Daishi Hokuetsu Financial Group's holding company into an Integrated Holding Company for both banks, but not necessarily eliminating or combining the two head-offices; the location of the Integrated Holding Company is yet to be determined
  • Mitsubishi UFJ Bank has taken a hybrid cloud approach enabled by Oracle technology to modernize the system infrastructure for its online banking service, Mitsubishi UFJ Direct; the bank selected Oracle Exadata Database Machine, the highest performing system for Oracle Database, to upgrade the Mitsubishi UFJ Direct platform; following the implementation, the bank experienced a 5x improvement in processing power and stable operations
  • Also, Mitsubishi UFJ Bank has selected Databricks as its next-generation data and AI platform, aiming to consolidate AI model development platforms scattered across the company and to use the Databricks Data Intelligence Platform as a foundation for developing new AI applications; the Databricks Data Intelligence Platform will be used to integrate a vast amount of data within MUFG Bank and facilitate the improved productivity of its 30,000 employees and customer value through advanced data analytics and the use of AI
  • FPT Corporation announced a strategic partnership with Sumitomo Corporation and SBI Holdings - Japan's leading conglomerates in the finance and industrial sectors to accelerate artificial intelligence (AI) adoption through the FPT AI Factory ecosystem, contributing to the advancement of sovereign AI in Japan; under this partnership, Sumitomo and SBI Holdings will each invest 20% in FPT Smart Cloud Japan, a subsidiary of FPT Corporation
  • Information Sharing of Fraudulently Used Accounts: in December 2024, the Japanese Bankers Association established the "Study Group on Information Sharing of Fraudulently Used Accounts" to discuss issues related to operations, legal requirements, and systems; going forward, discussions will be held with relevant authorities, and necessary measures will be implemented while proceeding with detailed operational design and system development planning

Payments

  • Stripe is adding PayPay online payments, Japan's largest QR code payment service with 68 million registered users; PayPay will be the first Japan-originated QR code payment method available on Stripe; in addition, Stripe enters a new partnership with DeNA; DeNA Pay is a third-party prepaid payment system that allows DeNA account holders to make payments within pre-charged amounts at supported services
  • Digital local currency app "Tochitsuka" begins account registration for Kono Shinkin Bank and Kanazawa Shinkin Bank: The Hokkoku Bank announced that it is now possible to charge the deposit-based stablecoin "Tochika" from deposit accounts at Kono Shinkin Bank and Kanazawa Shinkin Bank on the digital local currency app "Tochitsuka"; "Tochika" was Japan's first tokenized deposit when it launched in April 2024
  • Progmat has commenced Phase 2 practical verification for "Project Pax," aimed at building a cross-border remittance infrastructure using stablecoins; in addition, The Shoko Chukin Bank has become the first domestic bank to participate in this project; in Phase 2 (Practical Verification), testing closer to actual cross-border remittance operations will be conducted, with domestic and foreign banks acting as sending and receiving banks, identifying issues that need to be addressed for commercialization

Nomura Reports Fourth Quarter and Full Year Financial Results

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Nomura full-year results
  • Group pretax income of JPY 472bn, up 72% YoY, underpinned by strong three segment performance on gains across all divisions; International pretax income at record high of JPY 137bn
  • Best Wealth Management performance in 11 years as progress in asset management business initiatives drove 30% growth in recurring revenue YoY
  • Highest Investment Management pretax income since division established in April 2021, driven by best business revenue in four years
  • Wholesale pretax income at 15-year high reflecting higher revenues in all business lines and regions and disciplined cost controls
  • Year-end dividend of JPY 34 per share including commemorative dividend of JPY 10, making annual dividend of JPY 57; Full-year ROE of 10%
  • Resolution approved for repurchase of 100 million shares of Nomura Holdings common stock with upper limit of total repurchase price of JPY 60bn

Capital Markets

Asset Management

  • Nomura and Macquarie have entered into an agreement for Nomura to acquire Macquarie’s U.S. and European public asset management business, with approximately US$180 billion in retail and institutional client assets across equities, fixed income and multi-asset strategies; under the terms of the agreement, Nomura will acquire 100% of the stock of three companies that operate Macquarie's U.S. and European public asset management business for an all-cash purchase price of US$1.8 billion; upon completion, the total assets under management of Nomura's Investment Management franchise are expected to increase to around US$770 billion, with more than 35% being managed on behalf of clients outside Japan
  • Asset Management Nation 2.0: This week, the Asset Management Nation Parliamentary Association, initiated by former Prime Minister Kishida last November, presented its proposal document titled "Proposals for Asset Management Nation 2.0" to current Prime Minister Ishiba, outlining various policy proposals to advance Japan's position as an "asset management nation" across five key pillars

Digital Assets

  • Cantor nears $3 billion crypto venture with SoftBank and Tether: Cantor Fitzgerald is partnering with SoftBank, Tether.io and Bitfinex to create a multibillion-dollar bitcoin acquisition vehicle, the Financial Times reported; the vehicle, Cantor Equity Partners, will use the cash to create a new firm, called 21 Capital; Tether would contribute $1.5 billion of bitcoin, while SoftBank and Bitfinex would contribute $900 million and $600 million, respectively, of the digital currency
  • Saison Capital, BRI Ventures, and Coinvestasi have officially launched Tokenize Indonesia, a new accelerator program aimed at identifying and supporting Real-World Asset (RWA) start-ups in the blockchain and tokenization space; the initiative seeks to drive innovation and adoption of tokenized assets in Indonesia, building on findings from the November 2024 report “Project Wira – Indonesia’s Asset Tokenization Opportunity”, which estimates a US$88 billion market potential for asset tokenization in the country
  • BOOSTRY has begun offering "E-Prime for IR", a service that enables issuers who raise funds using security tokens to proactively refer to and use investor information and other information necessary for marketing; this may include additional information such as point IDs for unique point services provided by the issuing company; the collected point IDs, etc., are expected to be used by the issuing company when providing unique points as benefits to investors
  • Quick launches JPY-denominated Bitcoin Index: the "Crypto Asset Benchmark Study Group" organized by QUICK Corporation published a report entitled "Ecosystem Construction and Ripple Effects Brought About by a Domestic Crypto Asset Benchmark," which summarizes the discussions on the development of a domestic yen-denominated crypto asset benchmark (index)

The Last Word: The IMF's Updated Economic Forecast

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Source: IMF

In light of the current geopolitical uncertainty, the IMF has lowered its projections for Japan's GDP growth in 2025 and 2026, by 0.5 and 0.2 percentage points, respectively, and now sees GDP growth coming in at 0.6% for both years.

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