Megabank Interest
Money Design faces domestic competition including “8 Now,” an iPhone application from online brokerage 8 Securities Inc. that was launched in late 2015. The robo-advisor service allows users to invest in U.S.-listed ETFs with as little as $88, said Misako Suzuki, a Tokyo-based spokeswoman.
WealthNavi Inc., a startup backed by Japan’s three biggest lenders, plans to start offering robo-advisor services this month with a minimum 1 million yen investment, according to Chief Executive Officer Kazuhisa Shibayama. The company raised a 600 million yen funding round last year joined by investors including the venture-capital arms of Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
Japanese banks themselves have also started employing automated investment technology. MUFG’s trust banking arm began a robo-advisor service last year that creates a recommended portfolio after users punch in figures including their age, the level of returns they are seeking over time and their monthly investment budget, according to its website.
“Megabanks and existing financial institutions should be closely watching fintech startups, including robo-advisors, as potential acquisition targets,” Celent’s Yanagawa said.
Resort Village
Taniya spent a decade at Salomon Smith Barney before co-founding hedge fund manager Asuka Asset Management Co. in 2002. StormHarbour Securities has bought 99.9 percent of the hedge-fund manager over the past two years. He started Money Design in August 2013, a year before opening the International School of Asia, Karuizawa, in a resort village north of Tokyo.
Japanese people have more than half of their financial assets in cash, most of which is sitting in bank accounts collecting virtually zero interest thanks to years of monetary easing that culminated in the negative-rate policy introduced this year. Individuals had 894 trillion yen in cash or deposits at the end of March, the second-highest ever and more than the combined economic output of Germany and the U.K., Bank of Japan figures show.
“Saving might have been good for Japanese for a long time,” Taniya said. “But now they may need to find more investment vehicles abroad.”