SMFG-SBI Bet Big on Japan's Digital Affluent Boom with New Joint Venture
- SMFG and SBI target ¥10 trillion in assets through a new wealth management joint venture.
- Focus on digital affluent investors amid Japan’s rising mobile finance adoption.
- Japanese households remain cautious, with 51% of assets still in bank savings.
In a strategic move to tap into Japan’s rapidly growing digital wealth management sector, Sumitomo Mitsui Financial Group Inc. (SMFG) and SBI Holdings Inc. have announced the launch of a new joint venture aimed at managing assets worth ¥10 trillion ($69 billion) within the next five years. The venture will focus on affluent individuals, leveraging the increasing adoption of digital financial services across the country.
Funded by SMFG and its group companies Sumitomo Mitsui Banking Corp. and SMBC Nikko Securities Inc. along with SBI Holdings and its domestic brokerage arm SBI Securities Co., the collaboration represents a significant push into Japan’s underpenetrated wealth management landscape. SMFG’s CEO Toru Nakashima, speaking at a press conference on Monday, highlighted the potential of the digital affluent market. “The widespread adoption of mobile financial services is expected to accelerate the growth of the digital affluent segment, creating a significant market opportunity,” he stated.
The joint venture aims to achieve profitability within three years and is targeting pre-tax profits of ¥10 billion over a five-year horizon. The partnership reflects a broader trend within Japan’s financial sector, where traditional banks and digital platforms are joining forces to cater to an evolving client base with rising wealth and a preference for digitally accessible yet personalized services.
According to the Daiwa Institute of Research, the proportion of Japanese households with financial assets exceeding ¥50 million (approximately $347,000) is projected to increase from 5% in fiscal 2019 to 6.1% by 2035. More strikingly, the total financial assets held by these households are expected to surge from ¥714 trillion in fiscal 2024 to ¥953 trillion by 2035 a growth of nearly one-third.
This shift comes as Japanese policymakers continue encouraging citizens to move funds from traditional bank savings into higher-risk investments such as equities, to ease fiscal pressures caused by the country’s ageing population. Yet, cultural conservatism around investing remains strong about 51% of household financial assets were still held in bank accounts as of March last year, in stark contrast to 12% in the U.S. and 34% in the eurozone.
Other major players are also entering the fray. In April last year, Rakuten Securities launched a joint venture with Mizuho Securities targeting households with assets of ¥20 million or more, particularly those in their 40s and 50s seeking face-to-face financial services indicating that Japan’s wealth market is entering a new era of digital-personal hybrid finance.
