SBI and SMFG set sights on $69 bn treasure in Japan's digital wealth boom
Inc. (SMFG) and
SBI Holdings
Inc. are planning a new joint venture to offer
wealth management services
in
Japan
. The two firms are targeting affluent individuals in the country, with plans to manage assets worth ¥10 trillion ($69 billion) within five years.
According to a statement issued on Monday, the venture will be funded by SMFG and its group companies — Sumitomo Mitsui Banking Corp. and SMBC Nikko Securities Inc. — along with SBI Holdings Inc. and its main domestic brokerage, SBI Securities Co.
'The widespread adoption of mobile financial services is expected to accelerate the growth of the digital affluent segment, creating a significant market opportunity,' SMFG's chief executive officer Toru Nakashima said at a press conference. He added that the joint venture is aiming to become profitable within three years and targets pre-tax profits of ¥10 billion over five years.
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The partnership highlights rising interest in the
wealth management
sector in Japan, where high-net-worth households are expected to grow steadily. According to projections from the Daiwa Institute of Research, the share of households with financial assets of ¥50 million ($347,000) is expected to increase from 5% in fiscal 2019 to 6.1% by the end of fiscal 2035. Over the same period, total financial assets held by these households are forecast to grow by about a third, from ¥714 trillion at the end of fiscal 2024 to ¥953 trillion by the end of fiscal 2035.
Japanese policymakers are trying to encourage individuals to shift their money from bank savings to riskier investments such as equities. The goal is to reduce dependence on government spending at a time when the country's ageing population is placing increasing pressure on the social security system.
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Despite these policy nudges, Japanese households have remained cautious investors. At the end of March last year, around 51% of their financial assets were held in bank accounts. That compares with just 12% in the United States and 34% in the eurozone, according to data compiled by Daiwa Institute of Research.
The SMFG–SBI joint venture is part of a broader trend in Japan's financial sector. Similar partnerships have been launched to tap into the growing wealth market. In April last year, Rakuten Securities Inc. began operations with a new joint venture formed alongside Mizuho Securities Co., with which it shares both capital and business ties. That company is targeting households with financial assets of ¥20 million or more, especially individuals in their 40s and 50s who are already Rakuten Securities clients and prefer face-to-face financial services.
(with inputs from Bloomberg)
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