TOKYO, Dec 25 (Reuters) - Sumitomo Mitsui Financial Group is seeking to buy into the rapidly growing financial technology sector ahead of the lifting of a ban on such investments next year, the president of Japan’s third-largest bank said.
Koichi Miyata told Reuters Japanese banks lagged global peers in fintech because of regulations that only allow them to own traditional finance firms such as brokerages.
In a bid to redress that, SMFG has already started working with fintech startups, Miyata said, without giving further details. Larger rivals Mitsubishi UFJ Financial Group Inc and Mizuho Financial Group Inc have also said they are seeking out similar ventures.
“There is a limit to what we can do on our own for fintech,” Miyata said. “If they (fintech start-ups) join our group, we can lock in all of profits we generate together.”
Fintech companies offer services ranging from risk management and data security to mobile banking and alternative currencies, posing a threat to banks and other traditional financial institutions.
Major global banks such as Citi and Barclays are trying to adapt to these challenges, setting up hubs and investing in or mentoring start-ups in the fintech sector.
Globally, investment in fintech ventures tripled to $12 billion in 2014, according to consultants Accenture.
For Japanese banks, embracing fintech could also force changes to their corporate culture which puts more emphasis on not making mistakes than missing out opportunities, Miyata said.
“We have to venture into a world where we cannot expect a 100 percent success rate,” he added. “We have to be prepared to accept failures to achieve success. We have to change our mindset.” (Reporting by Miral Fahmy)