The fintech sector in Japan is flourishing, with robust growth in digital payments, buy now, pay later (BNPL) services, digital banking, crowdfunding, insurtech, and regtech.
E-commerce ecosystems such as d-Barai, PayPay and Line Pay are quickly expanding, signaling a shift from Japan’s traditional reliance on cash transactions. QR code payments, for instance, saw a staggering growth from nearly zero in 2018 to JPY 7.9 trillion (US$50 billion) by 2022, with a notable 50% increase just between 2021 and 2022, according to Deutsche Bank. This shift has significantly boosted the ratio of cashless payments from 13% in 2010 to 36% by 2022.
Major players in Japan’s fintech landscape include Rakuten, PayPay (backed by SoftBank) and Line, which offer extensive digital services catering to a large user base. International giants have also made significant inroads into Japan’s fintech realm through acquisitions, underscoring the momentum in Japan’s fintech sector. These deals include PayPal’s takeover of BNPL startup Paidy, the largest fintech deal in the Asia-Pacific region in 2021, as well as Google’s acquisition of payment and settlement startup Pring.
In addition to Internet conglomerates and foreign players, Japan is witnessing the emergence of dynamic homegrown fintech startups aiming to disrupt the traditional financial landscape and gain market share. To get a sense of Japan’s fintech startup landscape, we look today at some of the country’s fastest-growing venture-backed fintech startups, spotlighting their offerings and recent accomplishments.
Gojo and Company
Gojo and Company is a pioneering fintech startup focused on providing tech-enabled microfinance services to underserved communities in developing nations.
One of Gojo’s distinguishing features is its status as a social enterprise dedicated to addressing the financial needs of low-income individuals. Through its microfinance business, which offers small-lot loans tailored to the specific requirements of its clientele, Gojo aims to create a world where everyone has access to essential financial services.
Established in 2014, the company has rapidly expanded its operations, currently serving more than 2 million customers across Asia. Its remarkable growth trajectory has garnered widespread recognition within the fintech sector, and following its recent Series E financing round, which secured US$100 million in funding, it has stood out as one of Japan’s fastest-growing microfinance group. This achievement underscores Gojo’s potential for continued expansion and future success, with plans to pursue an initial public offering (IPO) in the coming years.
Shin Taejun, founder and CEO of Gojo and Company, told the Japan International Cooperation Agency in March that the company was expanding its microfinance business and providing financial inclusion in five new Asian countries, namely Cambodia, Sri Lanka, Myanmar, India, and Tajikistan, underscoring the company’s dedication to international development.
ZeroBoard
ZeroBoard, based in Tokyo, is a leading provider of cloud-based solutions designed to calculate, visualize, and reduce greenhouse gas (GHG) emissions. ZeroBoard’s flagship platform, also named ZeroBoard, serves as a centralized hub for organizations seeking to manage and mitigate their environmental impact.
Launched in March 2021, the ZeroBoard platform quickly gained traction as Japan’s first cloud-based service for GHG emission calculation and visualization. By July of the same year, it had advanced to include features like figuring out the carbon footprint of products and services, setting a new standard for the industry.
Understanding that environmental issues are global, ZeroBoard expanded its focus to help manage decarbonization in Asia. They formed partnerships with key players across different industries, leading to 2,000 companies using the platform by October, showing its broad acceptance and effectiveness in promoting sustainable business practices.
Aside from its main functions of calculating and showing emissions, ZeroBoard stands out by actively working with over 100 partners who specialize in reducing GHGs. Through this network, ZeroBoard helps clients put in place practical initiatives like saving energy, using renewable energy, and sustainable finance, all tailored to their specific goals.
In February, ZeroBoard announced the successful completion of its Series A funding round, raising a total of JPY 2.44 billion (US$18.4 million). The company said it would use the proceeds to fuel its ambitious plans for product development, talent acquisition, and international expansion.
Moneytree
Founded in 2012, Moneytree is a leading provider of financial data aggregation and portability solutions. At the heart of the company’s offerings lies Moneytree LINK, a platform designed to facilitate seamless access to high-quality financial data.
Moneytree LINK provides an application programming interface (API) that aggregates financial data from over 2,500 bank accounts, credit cards, electronic money, points/miles, and securities accounts. The company claims Moneytree LINK is currently used by more than 100 companies in total, including Sumitomo Mitsui Banking Corporation, Yayoi, TKC, regional banks, and credit unions.
For individuals seeking to take control of their financial well-being, Moneytree also offers a user-friendly personal financial management app. Available across desktop web, iOS, and Android devices in Japan, the Moneytree app empowers users with a comprehensive overview of their financial standing, facilitating informed decision-making and prudent financial management.
Small and medium-sized enterprises (SMEs) can also use Moneytree’s digital dashboard to view multiple account balances and transaction details in one place. This visualization helps them understand their financial situation better.
A leading financial data platform, Moneytree says it currently stores over 5.5 billion transaction records, and more than 22 million accounts. It claims over 5.5 million end-users, including via partner apps through Moneytree LINK.
The startup has raised about JPY 3.1 billion (US$29 million) in funding and is backed by prominent investors including Mizuho Capital, SMBC Venture Capital, Salesforce Ventures, and Sony Financial Ventures.
Kyash
Founded in January 2015 in Tokyo, Kyash is a leading provider of mobile payment and banking solutions to consumers and businesses. The company has built a proprietary full-stack banking infrastructure from the ground up to offer mobile-first consumer-facing digital wallets in Japan as well as the modern APIs to business partners for issuing/processing Visa cards.
Kyash’s key offerings include online payment and personal remittance apps under the Kyash service name, as well as prepaid cards accepted at Visa merchants. Notably, Kyash introduced Japan’s first Visa card with an integrated circuit (IC) chip and contactless payment function, featuring a sleek design with card numbers and names discreetly placed on the back.
Kyash boasts a prestigious client roster, including Visa Worldwide Japan, SBI Sumishin Net Bank, Seven Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation, and other key players in the financial industry. The startup secured a US$45 million in a Series C funding round in 2022 to accelerate its full-stack mobile banking business in Japan. The round brought its total funding to approximately US$100 million since its inception in 2015.
Upsider
Founded in 2018, Upsider is a key player in the fintech sector, specializing in corporate cards and payment solutions tailored for fast-growing companies, including startups. The company strives to become a leading business-to-business (B2B) financial platform and aims to be a “new infrastructure service” that supports the future economy.
Upsider’s corporate card solution addresses critical financial challenges faced by businesses, such as credit limits and accounting processing. In particular, it is popular for its credit limit of over JPY 1 billion (US$6.3 million) (prepaid and postpaid), virtual card issuance and management functions, and software-as-a-service (SaaS) functions that help speed up accounting processing.
The startup, which has raised about US$154 million in funding, claims several several thousands of active companies using its corporate card, a user continuity rate of over 99%, cumulative payment amount of more than JPY 250 billion (US$1.6 billion), and cumulative credit limit of over JPY 1 trillion (US$6.4 billion).
In March 2024, Upsider received the “Excellence Award” in the “Collaboration” category at the Japan Financial Innovation Award 2024. The accolade recognizes Upsider’s efforts to launch the Upsider Blue Dream Fund in collaboration with Mizuho Financial Group. The Upsider Blue Dream Fund is Japan’s first debt fund for growth-stage startups, underscoring Upsider’s commitment to driving transformative change and fostering innovation within the industry.
Featured image credit: edited from freepik
