RISE SUMMIT 2019

MUFG eyes SEA fintech pie with 20b yen corporate venture fund

RISE SUMMIT 2019

MUFG eyes SEA fintech pie with 20b yen corporate venture fund

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Japanese financial giant sees South-east Asian fintech startups riding on growth of the middle class
4 -min read
Listen to this article

Singapore

SOUTH-EAST Asia brims with opportunity for Mitsubishi UFJ Financial Group (MUFG), as it prowls for fintech startups to invest in via its 20 billion yen (S$242.5 million) Corporate Venture Capital (CVC) fund.

In January, the Japanese financial group launched a new unit, MUFG Innovation Partners (MUIP), to manage CVC funds that foster strategic partnerships with fintech startups. The 20 billion yen fund, also launched in January, can invest in startups both in Japan and abroad.

With its booming middle class, South-east Asia is a hotbed for innovative fintech startups, said Makoto Shibata, executive fellow of Japan Digital Design, an MUFG subsidiary promoting fintech and innovation within the group.

"Most South-east Asian countries are seeing that the wealth accumulated in the population is increasing - not just the super-rich, but the middle class people are growing their wealth," said Mr Shibata, who spoke to The Business Times at the RISE Corporate Innovation Summit in end-March in Bangkok, Thailand.

"That will create a new opportunity for innovation; for startups to provide support to (customers) in making investment decisions or analysing their financial well-being. I think we would see more players providing additional value in that space."

On the personal finance front, MUIP has already made a bet in its home market. In February, it invested in Japanese fintech Moneytree, which has developed a personal financial management app that aggregates data from users' bank accounts, credit cards, digital money, loyalty points and brokerage accounts.

Moneytree also operates a financial data platform, Moneytree Link, which aggregates financial data for accounting service providers and financial institutions. This ability to serve a real use case with massive data is valuable for MUFG's core businesses, Mr Shibata said.

"Our imagination is limited with these things, but I think new players will come up with more creative ideas to utilise… the customer data with the financial institution, (which) will play a critical role in creating new products and services," he said.

Prior to setting up its own CVC unit, MUFG has made ad-hoc startup investments. But with MUIP in its arsenal now, the company is looking to cast a wide net for good opportunities. For its next move, MUIP is open to investing in startups across the fintech spectrum, as long as they have a substantial business proposition that aligns with MUFG, said Mr Shibata.

Deep-tech startups that may not necessarily specialise in fintech are another possibility, he added, provided that MUFG sees potential synergies. "Emerging technologies like Artificial Intelligence, the Internet of Things or even quantum computing may benefit us in the long run," he said.

He declined to comment specifically on how many investments MUIP could make or how much capital it could deploy in South-east Asia, explaining that it depends on the opportunities that arise.

Nevertheless, he highlighted that MUFG sees many fintechs in this region that are interested to enter Japan -- something that the bank can help with.

Conversely, by working with the startup ecosystem here, MUFG could also help Japanese startups trying to penetrate key markets like Thailand, Malaysia or Indonesia, creating a win-win situation.

All things considered, MUFG realises that innovation must be a full-fledged strategy, of which corporate venture is just the proverbial cherry on the cake, Mr Shibata said.

"We've been doing different innovation activities like organising an accelerator programme and hackathons. Also, we've created a global innovation team to cover different areas. We (then) recognise that making investments is also an important part of establishing a good, long-term relationship with startups," he said.

The Business Times is the official Singapore media partner for the RISE Corporate Innovation Summit 2019, which took place on March 28 and 29 in Bangkok, Thailand.