Japan FinTech Observer #98

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

The past week saw the peak of earnings season for the financial sector, generally with very good to exceptional results for most players, including the FinTech segments of platforms like LY Corporation and Mercari; the only exception being cooperative Norinchukin Bank, which has been nursing fixed income investment losses for a while, and is now executing on a full recapitalization.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: King Street Capital Management and Tor Investment Management announced a USD 110m financing solution for Soul of Japan; MUFG Innovation Partners present their investee company, Kasanare; Credit Saison Group, including Saison Capital, and Woori Venture Partners have signed an MOU for a strategic collaboration
• Insurance: Meiji Yasuda Life Insurance Company has reached a strategic partnership agreement with Legal & General
• Banking: Third quarter earnings from MUFG (outstanding), Mizuho (very good), and Norinchukin Bank (disastrous), as well as strong contribution from Mercari's FinTech arm; SBI Holdings will enter the housing loan guarantee business from April 2025
• Payments: PayPay reported 67m registered users at the end of December 2024; regional stablecoin "Tochituka" expands to Ishikawa prefecture; DG Financial Technology implemented its "Cloud Pay" in parking payment machines; the Bank of Papua New Guinea and Soramitsu have successfully completed a proof of concept for the country's CBDC, Digital Kina
• Capital Markets: JPX is on track to meet its fiscal year targets; JPX Market Innovation & Research and Snowflake partner to jointly disseminate market data; Nomura reported strong financial results for the third quarter, with significant year-over-year growth in net revenue, income before income taxes, net income, EPS, and ROE
• Asset Management: The Government Pension Investment Fund has published its investment results for the third quarter
• Digital Assets: Japanese government to reach conclusion on cryptocurrency tax reform and other regulatory reforms by the end of June; OSL Group renamed CoinBest to OSL Japan following the successful completion of its acquisition; the FSA requests Apple and Google to remove unauthorized cryptocurrency exchanges from their Japanese app stores; Blockstream is expanding its global footprint with the opening of a new Tokyo office
• The Last Word: The Growing Number of Retirees

Japan FinTech Week

We are excited to present a stellar line-up for our Tokyo FinTech & Japan FinTech Observer Meetup during Japan FinTech Week, scheduled for Monday, March 3, 2025. Japan's sovereign blockchain, Japan Smart Chain, Japanese Yen stablecoin issuer JPYC, and Credit Saison will highlight the strength of the Japanese FinTech ecosystem.

Tickets are going fast, so please register on our Luma page.

We would also like to invite our subscribers to join the (still fairly small) Tokyo FinTech Association Slack channel.

Venture Capital & Private Markets

• King Street Capital Management, a leading global alternative investment firm, and Tor Investment Management, a leading independent alternative credit manager in Asia, announced a USD 110m financing solution for Soul of Japan, a land-based Atlantic salmon farm project in Tsu City. SOJ is backed by 8F Asset Management, an impact-focused private equity firm
• MUFG Innovation Partners present their investee company, Kasanare; in November 2024, MUIP made an investment in Kasanare, a company that provides customizable enterprise generative AI software that addresses various business challenges
• Credit Saison Group, including Saison Capital, and Woori Venture Partners have signed an MOU for a strategic collaboration

Not FinTech

• Hitachi has announced the establishment of the fourth fund of the corporate venture capital (CVC) fund "HV Fund"; the fund will have a size of 400 million USD, which is the largest CVC fund managed by Hitachi to date; it will make strategic investments in startups with cutting-edge, digital technologies such as data centers, distributed energy systems, future of work and industrial AI, as well as startups in new frontiers including bio, quantum, nuclear fusion, life science, space and adjacent technologies; with the establishment of the fourth fund, Hitachi's investment in CVC will reach 1 billion USD (AUM), a world-class investment scale which will further accelerate open innovation and contribute to the innovation ecosystem of startups globally
• Global Brain, East Ventures, and MOL PLUS (Mitsui OSK Lines CVC) are among the 20 new Co-investment Partners nominated by SEEDS Capital, the investment arm of Enterprise Singapore, to support promising Singapore deep tech startups; together they will catalyse at least S$300 million in investments over the next three years across key sectors including Advanced Manufacturing, Pharmbio / Medtech, Agrifood Tech, Sustainability (such as Energy, Circular Economy, Urban Mobility, Water), Spacetech and Quantumtech
• NTT DOCOMO Ventures invests in ElevenLabs, a startup that provides a speech synthesis platform based on its proprietary generative AI specializing in language models to generate natural speech that is extremely close to the human voice; whereas conventional text-to-speech technology has had difficulty expressing emotion and inflection, ElevenLabs’ unique architecture enables its platform to produce high-quality speech using less data than required for previous techniques, and it is capable of reproducing the speech styles and emotions of a variety of speakers

Insurance

• Meiji Yasuda Life Insurance Company has reached a strategic partnership agreement with Legal & General; this partnership mainly consists of (1) the acquisition of 100% of outstanding shares of L&G’s U.S. holding company, Legal & General America, and its subsidiaries including Banner Life, and (2) a partnership with L&G in the U.S. Pension Risk Transfer business; with an aim to establish a strong relationship with L&G to collaborate over the mid-to-long term, Meiji Yasuda plans to acquire 5% of L&G's shares from the market; Banner Life is scheduled to become a wholly owned subsidiary of Meiji Yasuda, subject to approval by regulatory authorities

Banking

• MUFG reported a strong financial performance for the first three quarters of the fiscal year ending in March 2025, highlighting record-high net operating profits (NOP) and net income, driven by robust customer segment growth, gains from equity sales, and increased earnings from equity method investments; the earnings release also addressed the impact of a recent JPY interest rate hike and provides a glimpse into expected performance for the remainder of the fiscal year; key drivers include successful overseas acquisitions, improved net interest margins, growth in fee-based businesses, and the accounting impacts of changes at Morgan Stanley (MS) and Krungsri (KS)
• Mizuho Financial Group reported results for the third quarter of the current fiscal year, with consolidated net business profits + ETF gains/losses of ¥964.2 bn (+15% YoY), 82% of FY3/25 guidance, exceeding analyst expectations; and net profits of ¥855.4 bn (+33% YoY), 104% of FY3/25 guidance.
• The Norinchukin Bank is undertaking significant capital enhancement initiatives to strengthen its profitability base; this involves increasing Tier 1 and Tier 2 capital through new issuances and redeeming existing debt; concurrently, the bank is selling low-yielding assets to improve its investment portfolio; while these actions are designed to improve long-term stability, the third quarter results reflect a substantial loss primarily due to the aforementioned sales of assets; the bank emphasizes that these actions are supported by its member cooperatives
• SBI Holdings and its consolidated subsidiary SBI ARUHI decided to jointly invest in a preparatory company to enter the housing loan guarantee business from April 2025; the SBI Group has been promoting partnerships with regional financial institutions nationwide to contribute to the national goal of regional revitalization; this guarantee business plans to include housing loan products provided by regional financial institutions as guarantee targets, aiming to further strengthen partnerships with regional financial institutions through the business
• Mercari's second quarter presentation prominently highlighted two key performance indicators (KPIs) that underscore the success and potential of Mercari's FinTech business: credit balance growth and operating profitability; the credit balance soared by 38% year-on-year, reaching a substantial 213.3 billion yen. This significant increase suggests strong user adoption of Mercari's credit offerings, driven by factors such as competitive interest rates, convenient application processes, and seamless integration with the marketplace platform
• Mongolia's Golomt Bank announced its second successful loan arrangement from Saison Investment Management Private Limited (SIMPL); SIMPL is the cross-border lending arm of Saison International; this green loan follows the initial tranche Golomt Bank received in April 2024 from SIMPL, which focused on promoting financial inclusion, water and sanitation as well as affordable and accessible health services to micro-SMEs and retail borrowers

Payments

• PayPay reported 67m registered users at the end of December 2024; the year-on-year revenue growth rate has increased to 19% (+JPY 14.6 billion)
• Hokkoku Financial Holdings and its group company The Hokkoku Bank have started offering "Ishikawa Tochipo" points issued by Ishikawa Prefecture using the digital local currency service "Tochituka," which is jointly provided with Digital Platformer"; Ishikawa Tochipo" will be introduced as part of the utilization of Ishikawa Prefecture's wide-area data collaboration platform, aimed at revitalizing the local economy and community; the awarded "Ishikawa Tochipo" points can be used at a rate of 1 Tochipo = 1 yen at over 2,000 Tochituka member stores throughout Ishikawa Prefecture
• DG Financial Technology has implemented its shared QR code payment solution "Cloud Pay" in the "GT-4200", a newly released cashless parking payment machine by Amano Corporation, a major parking system company that accounts for approximately 60% of the domestic market share of gate-type parking equipment; as a result, the new payment machine "GT-4200" now allows QR code payments for multiple brands; this is DGFT's first solution for parking automatic payment machines, and the first step in supporting cashless payments in the parking market
• The Bank of Papua New Guinea, in cooperation with the Japanese Ministry of Economy, Trade and Industry (METI), and FinTech company Soramitsu, has successfully completed a proof of concept for the country's central bank digital currency (CBDC), Digital Kina; the Digital Kina's PoC utilizes cutting-edge technology developed by Soramitsu and is supported by the SORA v3 Hub Chain, which is based on the open source Hyperledger Iroha 2 blockchain; this innovative initiative will address the financial challenges facing Papua New Guinea, including financial inclusion, security risks, and underdeveloped financial infrastructure

Capital Markets

• Japan Exchange Group reported third quarter results, keeping expenses in check while revenues increased; they are on track to meet their fiscal year targets
• JPX Market Innovation & Research and Snowflake announced a priority partnership between the companies to jointly disseminate data over Snowflake's market-leading platform; data provision via Snowflake will enable market participants to enjoy improved access to JPXI's rich and varied data offerings and empower cost-effective development of data analysis environments; this venture is supported by J-LAKE, Japan Exchange Group's integrated data services platform that launched in January 2025; J-LAKE centralizes data management within JPX Group, including JPX's market data, information on market participants, listed companies, and customers, and a wealth of alternative data and internal knowledge
• Nomura reported strong financial results for the third quarter of fiscal year 2024/25, with significant year-over-year growth in net revenue, income before income taxes, net income, EPS, and ROE; all business segments (Wealth Management, Investment Management, and Wholesale) contributed to this growth; the company highlighted its robust financial position and progress in achieving key performance indicators; while there were some QoQ declines in specific areas such as total sales in Wealth Management, overall, the company demonstrated strong performance
• ISDA has published "Derivatives Regulations and Usage in Japan: Buy-side Perspectives"; Japan’s regulatory landscape has generally been supportive of derivatives use by various segments of the buy side; while there are some guidelines on the purposes for which derivatives can be used by certain entities, which are not unique to Japan, the overall regulatory environment recognizes the valuable risk mitigation function that derivatives can serve; despite this regulatory environment, derivatives are not widely used by buy-side firms in Japan, and this could impact the ability of Japan to promote itself as a leading asset management center
• The FSA has published an English translation of its "Analytical Paper" that presents a detailed analysis of the sharp swings that occurred in the Japanese stock market on August 5, 2024; with the use of granular order/transaction level data of the Nikkei 225 Futures, the FSA has developed several indicators to evaluate market supply, demand and liquidity conditions, including dominance by buyers/sellers, concentration by specific entities in transactions, price impact per contract amount and liquidity around the best quote

Asset Management

• The Government Pension Investment Fund has published its investment results for the third quarter

Digital Assets

• Japanese government to reach conclusion on cryptocurrency tax reform and other regulatory reforms by the end of June: when asked about the establishment of regulations, including tax systems, for crypto assets (virtual currencies) at the House of Representatives Budget Committee on January 31, 2025, Finance Minister Katsunobu Kato stated that "we will reach a conclusion by the end of June this year"
• OSL Group, a publicly listed company fully dedicated to digital assets, has renamed CoinBest to OSL Japan, following the successful completion of its acquisition; the seasoned leadership team of CoinBest will continue to drive the development of OSL Japan; as part of its development plan, OSL Japan will continue to deepen its market presence and expand its product suite, including the development of a robust trading platform, enhancement of custody solutions, and provision of advisory services tailored to both institutional and retail clients in Japan; in the initial phase, OSL Japan will focus on its OTC services and launch an enhanced retail product dedicated to the Japan market, with exciting new features and campaigns expected to be unveiled in the coming quarters
• Despite clear legal obligations, exchanges such as Bybit, MEXC Global, LBank Crypto Exchange, KuCoin Exchange, and Bitget have continued to serve Japanese customers without the necessary authorization; in an unprecedented move, the FSA formally reached out to both Apple and Google, insisting that they remove these apps from their platforms; in response, Apple promptly complied, removing the apps from its App Store, thereby blocking Japanese iPhone users from downloading them; apparently, Google has yet to respond to the request
• Blockstream is expanding its global footprint with the opening of a new Tokyo office, marking a major advance in Bitcoin’s evolution in Japan and throughout Asia; partnering with Diamond Hands and Fulgur Ventures, Blockstream aims to drive adoption of Bitcoin layer-2 and self-custody technologies, as well as real-world asset (RWA) tokenization in one of the world’s most technologically advanced markets
• In collaboration with Soneium, Coop Records is redefining music monetization models; the First Coop Records Collection on Soneium is a collection of unreleased music from Tokyo-based producer NUU$HI – an open edition; the collection is live on SonovaNFT – an NFT marketplace on Soneium, bringing an easy-to-use user interface and seamless workflows to creators and collectors
• Aptos Horizon, a premier Web3 accelerator, is now accepting applications for its transformative 10-week program, scheduled to run from April 14 to June 23, 2025, in Osaka; designed to empower ambitious Web3 teams from around the globe, Aptos Horizon offers an unparalleled platform to scale blockchain solutions and build meaningful connections within Japan’s thriving tech ecosystem; spearheaded by Aptos Foundation, in partnership with AngelHack, NTT West, and HashPort, Aptos Horizon is powered by cutting-edge Move-based blockchain technology and the proven expertise of its collaborators; HashPort’s proficiency in interoperability, AngelHack’s global developer community, and NTT West’s robust technological infrastructure collectively create a comprehensive ecosystem to support dApp developers

The Last Word: The Growing Number of Retirees

There are 4,000 people who turn 65 years old every day in Japan.

In China, it is 32,000; in the US, it is 11,500; and in Germany, it is 3,300.

The bottom line is that the number of retirees globally is growing rapidly, and there is a need to provide retirement savings for all of them.

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