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Japan FinTech Observer #96

Norbert Gehrke

Norbert Gehrke

— 7 min read
Japan FinTech Observer #96
Cutting through the noise in Japanese Finance & FinTech

Welcome to the ninety-sixth edition of the Japan FinTech Observer.

Here is what we are going to cover this week:

  • Venture Capital & Private Markets: JAL & Hitachi participate in BeZero Carbon's USD 32m Series C; Z Venture Capital & Decima Fund participate in Vivident's seed round; Pacific Meta raises USD 4.2m in latest funding round
  • Insurance: Prudential Financial and Dai-ichi Life to pursue strategic partnership; more trouble in non-life insurance with the FSA taking administrative action against Toyota Mobility & Good Speed; hokan Group's CIEN launches insurance-focused recruitment
  • Banking: the FSA is pursuing effectiveness verification of Anti-Money Laundering measures; freee has completed its registration as a Financial Services Intermediary and launched on GMO Aozora Net Bank's BaaS offering; Seven Bank, the banking business of 7-Eleven group, has launched its ATM Services in Malaysia
  • Payments: the Financial System Council's Working Group on Payment Services has published its key findings and recommendations
  • Asset Management: WealthNavi's AuM exceed JPY 1.4trn, becomes MUFG subsidiary
  • Digital Assets: LINE has officially launched its Dapp Portal, backed by its Kaia blockchain; Kaia has integrated Fireblocks; NTT Digital kicks off NFT-based wellness campaign with 22 Companies
  • The Last Word: 2025 Outlook for International Financial & Economic Policies, and Tokyo as a Financial Center

Bank of Japan - Monetary Policy Meeting

The Bank of Japan has raised the policy rate following the Monetary Policy Meeting (MPM) by a quarter percentage point to 0.5%. The majority of the economists we follow expect one further rate hike this year, during the second half, for an end-2025 policy rate of 0.75%.

In response, the three mega banks announced adjustments to the interest rate on current deposits to 0.2%, a 40% pass-through, to take place in March. Aozora Bank will raise its interest rate for online accounts to 0.35% in February. UI Bank, a subsidiary of Kiraboshi Bank, raised its rate for one-year term deposits to 1% (up to JPY 10 million).

Mitsubishi UFJ Bank and Sumitomo Mitsui Banking Corporation also announced that they would raise their short-term mortgage rates from 1.625% to 1.875% per year, a 100% pass-through leading to NIM expansion. The short-term mortgage rate serves as an indicator of the base interest rate for variable-rate mortgages.

Variable mortgage rates are generally adjusted twice per year. For the major online mortgage originators, SBI Sumishin Net Bank raised its variable mortgage rates in October, following the July BOJ hike, and Rakuten Bank only raised its rate in January. However, Rakuten Bank also introduced monthly rate adjustments for any new contracts signed in 2025.

The Bank of Japan's full "Outlook for Economic Activity and Prices" is also avaiable.

Venture Capital & Private Markets

  • JAL & Hitachi participate in BeZero Carbon's USD 32m Series C: the round is led by Temasek-founded GenZero, a decarbonisation-focused global investment firm headquartered in Singapore, with additional investment from Japan Airlines and the Translink Innovation Fund; existing investors EDF Pulse Ventures, Hitachi Ventures, Illuminate Financial, Intercontinental Exchange (ICE), Molten Ventures, Qima, and Quantum Innovation Fund also committed fresh capital
  • Z Venture Capital & Decima Fund participate in Vivident's seed round: Vivident, a startup developing AI-powered character IP technology, has secured $1.5 million in seed funding from global investors across South Korea, Japan, the United States, and Hong Kong; the round included participation from leading venture firms including Hashed, Mashup Ventures, TheVentures, Modhaus (Korea), Sfermion (US), as well as Japan's largest CVC Z Venture Capital, Decima Fund, and Hong Kong-based CMCC Global's Titan Fund
  • Pacific Meta raises USD 4.2m in latest funding round: Pacific Meta supports companies and projects challenging the Web3 space by leveraging their specialized expertise in Web3 to offer assistance in fundraising, consulting, business development, and marketing; additionally, they help domestic projects expand overseas and assist international projects in entering Japan (and East Asia), making full use of their global team; the Pacific Meta office, Pacific Hub, also creates opportunities for the Web3 community to connect and collaborate

Insurance

  • Prudential Financial and Dai-ichi Life to pursue strategic partnership: Prudential Financial and Dai-ichi Life Holdings have announced their intent to pursue a strategic partnership focused on product distribution and asset management capabilities; the partnership would include a product distribution agreement in Japan, where Prudential would select Dai-ichi’s wholly owned subsidiary, The Neo First Life Insurance Company, as an exclusive product partner; the partnership would include distributing certain Neo First life products through Prudential’s Life Planner sales channel; in addition, PGIM, Prudential’s global investment manager, would intend to provide asset management services to subsidiaries of Dai-ichi Life Holdings through its PGIM Multi-Asset Solutions (PMA) business; these services would include management of asset classes such as structured products and private credit
  • Administrative action against Toyota Mobility & Good Speed: the Financial Services Agency, through the respective Financial Bureaus, has issued administrative orders against Good Speed and Toyota Mobility Tokyo, both of which are involved in car sales, repair, and also operate as insurance agencies; both companies have been found to have significant issues across multiple areas, including: improper insurance claims, weak internal controls (particularly with the 3 lines of defense), inadequate compliance, and poor customer data protection; the administrative orders mandate comprehensive investigations, implementation of robust improvement plans, and strict reporting schedules; the issues highlight significant failures in corporate governance and a lack of focus on regulatory compliance, potentially stemming from prioritization of sales over proper operational and ethical practices
  • hokan Group's CIEN launches insurance-focused recruitment: CIEN, a fully-owned subsidiary of hokan, has obtained a paid recruitment business license on January 1, 2025, and has launched a new insurance industry-focused talent recruitment service; this service aims to support human resources challenges for insurance companies, insurance agencies, insurance-related companies, insurtech firms, and overseas companies planning to enter the Japanese market

Banking

  • Effectiveness verification of Anti-Money Laundering measures: the Financial Services Agency (FSA) has published a draft summary of issues and practices for dialogues on verifying the effectiveness of anti-money laundering measures for public comment, due by Thursday, February 20, 2025; the FSA emphasizes a shift towards continuous self-assessment by financial institutions, coupled with in-depth dialogue with the FSA; the draft document stresses the importance of risk-based approaches, ongoing adaptation to evolving threats, and the need for financial institutions to not only implement measures but also demonstrate their effectiveness to internal and external stakeholders; the FSA will not use the document as a checklist but rather as a foundation for dialogue
  • freee has completed its registration as a Financial Services Intermediary, allowing it to begin offering "freee Branch" accounts for corporate customers by leveraging the Banking as a Service (BaaS) platform of GMO Aozora Net Bank; freee's entry into the financial services intermediary business allows it to mediate deposit services, enabling simultaneous application for a GMO Aozora Net Bank "freee Branch" account when incorporating a company through "freee Company Establishment," freee's online company formation service
  • Seven Bank, the banking business of 7-Eleven group, has launched its ATM Services in Malaysia, making banking more convenient to Malaysian consumers; Seven Bank installed its original cash recycling machine in Rawang in January 2025; the coming installation of the first 100 machines will be made in Kuala Lumpur, Selangor, Penang, and Johor and the area is planned to expand to Sabah and Sarawak in 2026

Payments

Capital Markets

Asset Management

  • WealthNavi's AuM exceed JPY 1.4trn, becomes MUFG subsidiary: WealthNavi, the provider of “WealthNavi,” the top Japanese robo-advisor in terms of assets under management and number of users, announced that assets under management reached 1.4 trillion yen as of January 23, 2025, approximately 8 years and 6 months since the official release in July 2016; also, MUFG's tender offer for WealthNavi's shares has resulted in the total number of voting rights in WealthNavi held by MUFG exceeding 90% of the number of the voting rights of all shareholders of WealthNavi; therefore, an Extraordinary Shareholders’ Meeting to approve a Share Consolidation is not required

Digital Assets

  • LINE has officially launched its Dapp Portal, a global platform where users can discover, play, and enjoy Mini Dapps; it also serves as a comprehensive marketplace for trading digital items and managing digital assets; LINE plans to have more than 1,000 mini apps running by the end of 2025
  • Kaia has integrated Fireblocks, an enterprise platform to manage digital asset operations and build innovative businesses on blockchain; the collaboration enables institutions to securely manage and transfer assets on the Kaia blockchain network, offering enhanced capabilities in tokenization, DeFi, and blockchain-based financial products; Fireblocks brings improved operational efficiency, reduced asset management risk, and simplified regulatory compliance to the Kaia blockchain ecosystem
  • NTT Digital kicks off NFT-based wellness campaign with 22 Companies: themed “Happy & Wellness,” this campaign is led by Sanrio’s popular unit “HAPIDANBUI” as the cheer captain, with participating companies joining as cheering team members to make the campaign more engaging; together, they aim to create opportunities for participants to feel more energized both mentally and physically

The Last Word: 2025 Outlook for International Financial & Economic Policies, and Tokyo as a Financial Center

On Friday, January 24, 2024, FinCity.Tokyo hosted the "Tokyo Asset Management Forum" (TAMF) in the morning, and the "FinCity Global Forum" (FCF) in the afternoon.

This FGF Keynote Talk centers around the global economic outlook, with a specific focus on Japan, its economic policies, and its position in the global financial landscape. The conversation was moderated by Jesper Koll, and features two prominent Japanese figures: Hiroshi Nakaso, former Deputy Governor of the Bank of Japan, and Masato Kanda, then Vice Minister of Finance for International Affairs and soon-to-be head of the Asian Development Bank (ADB).

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