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The majority of Japan’s elderly population still prefers to use cash for transactions, According to a recent report Quoting government data. The Japanese government said that in 2023, non-cash transactions in Japan totaled 126.7 trillion yen ($885 billion), representing 39.3% of the country’s total spending. The government hopes that number will reach 40 percent by 2025.
The Japanese government’s initiative to increase cashless transactions is backed by a Tokyo-based startup called Smart Bankwhich offers an app and services that make switching to cashless payment easier for people.
Shota Hori (CEO of SmartBank), along with his twin brother Yuta Hori (CTO) and Jun Takitani (CXO), founded the company in 2019 after selling their previous company, Fablic, to Rakuten in 2016. While running Fablic, the three discovered that many… Users still use cash in daily financial transactions. The founders launched SmartBank in an attempt to address a problem within the consumer finance industry in Japan.
SmartBank’s primary target users are individuals in their 20s and 30s looking to manage their personal finances, as well as married couples looking to manage their finances. Now the company says it has more than a million downloads, but it did not mention the number of users.
Its core product is a prepaid card and finance management app that provides a deposit account. Its prepaid cards include B/43 My Card, a Visa-branded payment card for single individuals; B/43 Pair Card for users to manage their finances with their partners; And the B/43 Junior card for teens.
“Our core user base, (which was B/43 My Card), are now B/43 Pair Card users… This is important because banks in Japan do not offer joint bank accounts, and B/43 has become the preferred destination,” Shimogawara said. Product”.
The startup said on Tuesday that it has raised ¥4 billion ($26 million), with ¥1.1 billion ($7.2 million) coming from debt financing and ¥2.9 billion ($18.8 million) from equity provided by its existing investor, Global. Brain. The capital comes from a fund formed with SMBC, one of the largest banks in Japan. As of April 2024, SmartBank has raised a total of JPY5.93 billion ($38.5 million) in equity and JPY1.1 billion in debt since its inception. The startup will use the new capital to double employment from 49 employees in October to about 100 employees by 2025; Half of the total workforce will be from the engineering team, SmartBank CFO Yuta Shimogawara said in an exclusive interview with TechCrunch.
The latest funding comes approximately two and a half years after its Series A, amounting to $20 million, in July 2022. Since then, the startup has expanded its user base and product offerings with the aim of becoming a comprehensive financial platform like a bank, providing a wide range of financing. A range of financial services for future users.
Just last month, the company introduced AI receipt reading feature Chihaya Akaike, Director of Business Operations at SmartBank, said that the company is using generative AI technology to transform its application into an AI-based financial advisor. This feature helps users better understand their finances, optimizes and automates financial activities, and enables them to use, save and invest their money, Akailke told TechCrunch.
“Consumer fintech services in Japan have been slow to adopt AI, but our goal is to become the leading AI fintech company in the country,” Akaylik continued.
Furthermore, the company recently added a feature that allows users to link their credit cards and bank accounts to B/43 to get a comprehensive view of their finances. “We will make our service accessible to non-card users when we open it so that users can start using B/43 without issuing a card and simply by linking their existing credit cards and bank accounts, which will also expand our revenue stream,” Akyelke explained.
SmartBank obtained a money transfer license three years ago, allowing users to withdraw their deposits in cash. It also obtained a prepaid payment tool license in April, enabling the startup to retain users’ deposits. The licenses help the company provide services such as P2P payments and transfers.
Its peers like MoneyForward and Zaim cannot hold user deposits, limiting their ability to help users manage their personal assets, such as savings and investments, according to the company.
The five-year-old company plans to diversify revenue streams beyond interchange fees (IRF), where most revenue comes from. Akaike said that in addition to IRF, it has implemented other services such as buy now pay later (BNPL), subscription (B/43 Plus), and referrals.
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