Nikkei News was informed that Sumitomo Mitsui Financial Group and SBI Holdings will establish a comprehensive partnership with the goal of being ahead of financial technology.
Through this transaction, Sumitomo Mitsui, Japan ’s second-largest bank, will acquire shares in the only mobile brokerage business unit of SBI, Japan ’s top online broker. SMFG will also invest 100 billion yen (930 million US dollars), and SBI will set up the fund to invest in financial technology companies.
The transaction will combine SMFG's national branch network with SBI's dominance in online transactions. It is expected to help partners create products and services more suitable for millennials.
Partners are expected to sign an agreement this week.
Financial groups also believe that co-owning capital is a way to deepen ties.
Subsequently, digital technology attracted companies outside the financial industry to enter the industry, further intensifying competition.
For example, the chat application operator Line provides financial settlement, investment and insurance services through its application, while the online retailer Rakuten provides a full range of financial services through its banking and brokerage departments.
The agreement will make up for each partner ’s weaknesses. SMFG tries to enhance its digital products, and SBI seeks to increase face-to-face consultation in its digital services.
SMFG will acquire a 20% stake in SBI Neo Mobile Securities sometime in June. The investment is expected to reach billions of yen.
The investment services provided by Neo Mobile were very popular among people who had little investment experience in the 1920s and 1930s. Customers can use the points earned through the T-point card to invest.
Anyone can get a T-Point card in Japan. The fee for using these prepaid electronic money cards is 200 yen per 100 yen, and users can spend 1 point or 1 yen at participating retailers.
It only costs a few hundred yen to invest in SBI Neo Mobile's services.
SMFG's SMBC Nikko Securities mainly targets elderly users and intends to expand its user base through partnerships.
The two groups plan to provide a range of products, including mutual funds and insurance policies.
The 100 billion yen investment fund that SBI plans to establish with SMFG will focus on investments in companies using digital technologies, including fintech, blockchain, and 5G wireless networks.
SMFG and SBI plan to accelerate their digital business strategy through cooperation with invested companies.
The partnership will also include joint development of support services for regional banks and other financial institutions.
The SBI has been strengthening its alliance with regional banks and has capital cooperation with local banks such as Shimane Bank, Fukushima Bank and Tsukuba Bank.
The top online broker plans to set up a new company that will provide fintech and general system services to regional banks sometime next month. SMFG also agreed to invest in the company.
News reference: https://asia.nikkei.com/Business/Finance/Japan-s-SMFG-and-SBI-to-partner-in-digital-banking