Japan is a country which seems to remain quiet on the Fintech front, but that situation might be coming to change very soon. Mizuho Financial Group has plans to go on an acquisition spree in this sector, as they want to gain a competitive edge over other financial players. This is quite positive news for Fintech startups around the world.
For many Fintech startups, the goal is to get acquired by a competitor or partner in the long run. This is part of the reason why it is so important to keep an open mind towards collaborating with banks and other institutions these days. For some Fintech companies around the world, the acquisition may come a lot sooner than expected.
Mizuho Financial Group Has Big Plans
Many people know Japan as a country where consumer technology is evolving with leaps and bounds. But where financial technology is concerned, things have been virtually unchanged for far too long. Now that the Fintech movement is gaining traction on a global scale, institutions such as Mizuho Financial Group are forced to innovate through acquisition.
From the information we have received, it is adamant Mizuho Financial Group will focus their attention on consumer lending in the mobile space. Additionally, the group will employ big data analytics tools to manage credit risk, an important aspect of the banking sector. The mention of big data is worth noting, as they are one of the first major financial institutions to publicly acknowledge the value of these analytical tools.
Mizuho Financial Group President Yasuhiro Sato told the media:
“The smartphone using generation doesn’t have much money yet, and as a bank they don’t represent a lot of profit. But if you don’t have to open a physical branch network to do consumer lending for these people, you can make money from them.”
Mizuho Financial Group indicated they are targeting the US fintech market for artificial intelligence and big data processing. The bank feels confident they will be able to close some of their acquisition deals before the end of 2016. At the time of writing, their spokesperson did not elaborate on which companies are on their short list.
What sets Mizuho Financial Group apart from other financial institutions looking to acquire Fintech startups is their decision-making process. The bank prides itself on moving fast and utilizing their relationship with SoftBank to gain access to prominent players in the Fintech sector.
According to FT, the size of the acquisition fund could be as large as US$100m. Moreover, there seem to be indications Mizuho Financial Group will expand this pool later this year. But there is another reason as to why the financial institution is making this move only now, rather than several years ago.
Banking law in Japan will be amended, allowing Japanese banks to exceed the 5% voting rights limit in a non-financial company. For the time being, Fintech startups are classified as “non-financial companies”. It is expected other Japanese banks will start investing in this industry over the coming months.
Header image courtesy of Mizuho Financial Group