SBI will now offer wealth management services in Japan

SBI will now offer wealth management services in Japan

Sumitomo Mitsui Financial Group (SMFG) and SBI Holdings have announced a joint venture to provide wealth management services in Japan.

The two companies are targeting high-net-worth people with plans to manage assets worth ¥10 trillion ($69 billion) over the next five years.

The venture will be funded by SMFG and its group firms—Sumitomo Mitsui Banking Corp and SMBC Nikko Securities Inc, along with SBI Holdings Inc and its main domestic brokerage, SBI Securities.

Venture aims to be profitable within 3 years

The JV also plans to be profitable within three years, targeting pre-tax profits of ¥10 billion over five years.

SMFG's CEO Toru Nakashima claimed the widespread adoption of mobile financial services is likely to spur growth in the digital affluent segment, thus creating a significant market opportunity.

This partnership underscores the rising interest in wealth management services in Japan, as high-net-worth households are expected to grow steadily.

Affluent households in Japan expected to grow

The Daiwa Institute of Research projects that the share of households having financial assets of ¥50 million ($347,000) will rise from 5% in fiscal 2019 to 6.1% by the end of FY2035.

During this time, total financial assets held by these households are tipped to grow by about a third, from ¥714 trillion at the end of fiscal 2024 to ¥953 trillion by end of fiscal 2035.

Japanese households remain cautious investors

The Japanese government is trying to persuade people to move their money from bank savings into riskier assets like equities.

The aim is to reduce reliance on government spending as the country's aging population puts more strain on the social security system.

However, despite these policy nudges, Japanese households have remained cautious investors with almost 51% of their financial assets held in bank accounts at the end of March last year.

Other similar ventures in Japan's financial industry

The SMFG-SBI JV is part of a wider trend in Japan's financial industry.

Other similar partnerships have also been formed to tap into the rising wealth market.

For instance, Rakuten Securities Inc launched a new JV with Mizuho Securities last April.

This firm targets households with financial assets of ¥20 million or more, especially those who are in their 40s and 50s who are already Rakuten clients and prefer face-to-face financial services.