The majority of Japan's aging population still prefers to use cash for transactions, according to a recent report citing government data. According to the Japanese government, the total amount of cashless transactions in Japan in 2023 was 126.7 trillion yen ($885 billion), accounting for 39.3% of all domestic spending. The government hopes this number will reach 40% by 2025.
The Japanese government's efforts to increase cashless transactions are being supported by SmartBank, a Tokyo-based startup that provides apps and services to help people easily transition to cashless payments.
Shota Horii (SmartBank CEO), along with his twin brother Yuta Horii (CTO) and Jun Takeya (CXO), founded the company in 2019 after selling their previous company, Fablic, to Rakuten in 2016. While running Fablic, the trio discovered: This means that many users still use cash for everyday financial transactions. The founders launched SmartBank to address a problem in Japan's consumer finance industry.
Smart Bank's main target users are individuals in their 20s and 30s who want to manage their personal finances, and couples who want to manage their finances. The company says it currently has more than 1 million downloads, but did not disclose the number of users.
Its flagship product is a financial management app that offers prepaid cards and savings accounts. The company's prepaid cards include the B/43 My Card, a Visa-branded payment card for singles. B/43 pair card for users to manage their finances with partners. and the B/43 Junior Card for teenagers.
“Our core user base is[which was B/43 My Card]are currently users of the B/43 pair card…This is important as Japanese banks do not offer joint bank accounts, making the B/43 the go-to product,” said Shimokawara. I did.
The company announced Tuesday that it had raised 4 billion yen ($26 million). Of this amount, 1.1 billion yen ($7.2 million) came from debt financing and 2.9 billion yen ($18.8 million) from equity provided by current investor Global Brain. The equity capital will be raised from a fund established with Sumitomo Mitsui Banking Corporation, one of Japan's largest banks. As of April 2024, Smart Bank has raised a total of 5.93 billion yen ($38.5 million) in equity and 1.1 billion yen in debt since its inception. The company plans to use the new capital to double its workforce from 49 employees in October to about 100 by 2025. In an exclusive interview with TechCrunch, SmartBank CFO Yuta Shimokawara said that half of the company's total workforce will be in the engineering team.
This funding is the first in about two and a half years since the $20 million Series A in July 2022. Since then, the startup has expanded its user base and product offering with the goal of becoming a comprehensive banking-like financial platform. In the future, we will provide various financial services to users.
Just last month, the company introduced an AI receipt reading feature that uses generative AI technology to turn the app into an AI-driven financial advisor, said Chihaya Akaike, director of business operations at Smart Bank. The feature will help users better understand their financial situation, optimize and automate their financial activities, and enable them to spend, save and invest their money, Akairuke told TechCrunch.
“Japan's consumer fintech services are lagging behind in the use of AI, but our goal is to become the top AI fintech company in the country,” Akailuke continued.
On top of that, the company recently added the ability for users to connect their credit cards and bank accounts to B/43 to get a complete picture of their finances. “When we open up the ability for users to start using B/43 without issuing a card, simply by linking their existing credit card and bank account, we will also extend our service to non-card users. This will also expand our revenue stream.''
SmartBank received a money transfer license three years ago, allowing users to withdraw their deposits for cash. In April, the company also acquired a license for prepaid payment methods, allowing it to store users' deposits. This license will help the company offer services such as payments and P2P money transfers.
The company said its peers, such as MoneyForward and Zaim, cannot hold users' savings, limiting their ability to help users manage personal assets such as savings and investments.
The five-year-old company plans to diversify its revenue sources beyond interchange fees (IRFs), which make up the bulk of its revenue. In addition to IRF, Akaike said it has also implemented other services such as Buy Now Pay Later (BNPL), subscription (B/43 Plus), and referrals.