Rakuten Bank
Rakuten Bank is shaking up Japanese financial services by doing what people said could not be done: turning cash-loving Japanese towards digital applications, wallets and smartphone apps.
Unquestionably Rakuten Bank is helped by being part of the Rakuten e-commerce group; the natural analogy is to think of it as the Ant Financial to Alibaba. Rakuten senior is a trusted and powerful brand in Japan that has given a vast head start to its banking subsidiary, and to the other relevant parts of its ecosystem, including the card, securities and insurance subsidiaries.
It has built on that advantage extremely well. This year it passed eight million accounts, having accrued the last million in 10 months; it is well on track for the 10 million that its executives believe will give it a critical mass.
Even before reaching that target, president Hiroyuki Nagai has built a bank that is profitable, which is not always the case with digital endeavours; in fiscal 2018, core net business profit was ¥27 billion ($250 million). Also, it’s not just about accounts, which can sometimes mask a dearth of assets or profitability. The home-loan balance has reached almost ¥500 billion with 30% year-on-year growth.
Like other digital leaders – such as Korea’s kakaobank – the utility of the offering rests on a single bank app that is a gateway to everything else. Behind that, new things are happening: new services added in the last 12 months include Rakuraku Warikan, a method of splitting payments such as a restaurant bill; a new convenience-store payment facility; and a steady extension of corporate services ranging from business credit cards to bank business loans, mass payment methods and international remittance services.
Though Rakuten subsidiaries are all legally separate entities, the bank’s Money Bridge service connects it directly to Rakuten Securities. The result – and this is once more an echo of Alibaba/Ant or Tencent/WePay – is an ability to put the service at the heart of a customer’s lifestyle, and, through convenience, make it simultaneously simple and essential. There is much more growth to come.