Shota Horiihis twinbrother Yuta Horii and Jun Taketani co-founded smart bank in 2019 after selling their previous startup Fablic, a Japanese online marketplace for second-hand goods, to Rakuten in 2016. While running Fablic, the trio found that many users were still using cash to pay for and manage their day-to-day finances. The founders wanted to address the problem in the consumer finance industry in Japan and launched SmartBank.
The Japanese fintech startup announced today that it has raised a US$20 million (JPY2 billion) Series A funding round led by Globis Capital Partners with participation from Z Venture Capital, Mitsui Sumitomo Insurance Venture Capital and DBJ Capital launched. Existing investors including Global Brain and ANRI also participated in the round.
SmartBank wants to make it possible for everyone to manage finances “from daily expenses to planning for the future” by offering their B/43 digital finance management service, which is a Visa prepaid card and personal finance management app acts.
The company is similar to challenger banks like Brazil’s Nubank and UK’s Monzo, but its key differentiator (in terms of features) is that it doesn’t just focus on individuals, but also offers joint accounts for couples. Additionally, it will soon release services for parents and children to manage finances together, the startup says.
In Japan, banks do not offer joint accounts for couples. As the number of dual-income households increases in the country, they are more uncomfortable maintaining the overall flow of money and savings compared to single-income families, Horii said. The startup has conducted over 250 user interviews and estimated that up to 15 million dual-income households face challenges managing household finances, Horii continued.
“Unlike other countries, traditional banks in Japan don’t offer joint accounts,” SmartBank CEO Horii told TechCrunch. “However, we do not operate under a banking license and use the license to transfer money. We can offer accounts that users can share and share with their families.”
The latest financing, which brings the company’s total capital to $30 million, will be used to further expand its B/43 service. Users can check all expenses recorded and visualized in real time in the app by simply topping up their monthly budget in the B/43 app and making payments.
The company claims that the retention rate of the B/43 joint account service is almost 100% after using the service for three months. Within a year since the launch of B/43 in April 2021, the monthly transaction volume has reached several million USD, according to the company.
The Japanese startup also says that the total number of downloads surpassed 100,000 in December and is now aiming to reach the total number of downloads of 1 million by the end of 2023. The company has not disclosed its rating and monthly active users (MAUs).
SmartBank generates revenue streams in two ways. One is the interchange refund fees it receives from Visa each time its users complete a transaction with their card. Another is through lending. The startup offers Charge Now Pay Later, which allows users to borrow up to 50,000 JPY (about $365 USD) and top up their account. Users pay the borrowed amount at the end of the next month with a commission fee, which is the company’s revenue stream.
The aim of the SmartBank is to expand its service from managing everyday living expenses to medium to long-term savings and investments. The company has a team of 19 employees.