(Feb 7): Sumitomo Mitsui Financial Group Inc (SMFG) and SBI Holdings Inc are considering teaming up to start a business that will provide digital wealth management services for customers that aren’t the richest in Japan but still prosperous, people familiar with the matter said.

The plan is for the new joint venture (JV) to be funded by two SMFG firms, Sumitomo Mitsui Banking Corp. and SMBC Nikko Securities Inc, and SBI Securities Co, part of the Tokyo-based SBI financial group, said the people, who asked not to be identified discussing matters that aren’t public. Details such as investment amount and how that will be split up are being finalised, and the new company may be announced as early as the end of March.

Japanese households that have financial assets of ¥50 million (RM1.45 million) are expected to rise to 6.1% of the total by the end of the fiscal year starting April 2035 from 5.0% in fiscal 2019, according to forecasts by Daiwa Institute of Research. The amount of assets held is also expected to rise by about a third to ¥953 trillion by the end of fiscal 2035 compared with the end of fiscal 2024.

An SMFG spokesperson declined to comment on individual deals. An SBI Holdings spokesperson also declined to comment.

Japanese policymakers are encouraging individual investors to put more of their money in riskier assets such as equities, to lessen their reliance on government spending at a time when a rapidly aging population strains the social security budget. Even so, Japanese households held about 51% of their financial assets in bank accounts at the end of March last year, a reflection of their conservative investment approach and compared with around 12% in the US and 34% in the eurozone, according to data compiled by Daiwa Institute of Research.

SMFG and SBI staff are still considering what sort of services their new venture may offer, but one of those might be providing advice on asset management. That could also also be done via the group’s Olive’s smartphone app.

Similar alliance moves are happening elsewhere in Japan’s securities industry. 

Rakuten Securities Inc established a JV with Mizuho Securities Co, with which it has a capital and business alliance, and began operations in April last year. The company is targeting households owning financial assets of ¥20 million or more, and is aiming to attract individuals in their 40s and 50s who are Rakuten Securities customers and have face-to-face needs. 

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