Once shunned by megabanks, this Japanese startup is now winning them over

Japanese fintech startup Moneytree and Japan’s second largest megabank Mizuho Financial Group announced a partnership today in which Moneytree’s API technology will let Mizuho customers finally see all of their financial data in one place.

Moneytree CEO Paul Chapman explains the future of fintech in Japan.

Moneytree, founded in Tokyo in 2012, offers three main services: personal finance, business expense management, and Moneytree Pro for corporate accounts. According to today’s announcement, it is the first time that one of Japan’s megabanks will partner with a startup on developing new technology.

This is not the first time Moneytree gained recognition from establishment finance. It was also part of a historic investment involving all three megabanks in 2015.

However, overall Japanese banks’ investments in startups have been very low compared global peers. According to a report by Accenture, Japanese banks have only invested 0.40 percent of the roughly US$12 billion put into fintech in 2014.

Part of this lack of investment may be due to strict regulations on banks’ investments. Article 16-3 of the Banking Act in Japan states banks can only own a maximum of 5 percent of total voting rights in nonfinancial companies. Unfortunately fintech companies are often considered under this category; even for companies classified as “bank holding” the maximum is capped at 15 percent (Banking Act, Article 52-24).

Deregulations are anticipated by the end of 2016 and banks are starting to move. The president of Japan’s third largest bank, Sumitomo Mitsui Financial Group, was quoted as being keen to invest in fintech.

David and Goliath shake hands

Moneytree CEO Paul Chapman on the left shakes hands with Nobuhisa Abe of Mizuho’s incubation partner team.

Moneytree has been working with IBM on its API Economy initiative since October of last year. IBM’s program hopes to encourage businesses to open APIs to better help services, applications, and systems work together. It looks like the partnership has paid off.

The tie up with Moneytree and Mizuho this time consists of the first inbound API for a Japanese bank. That means Mizuho will be accepting data from Moneytree.

The service is estimated to be released this spring. The design revealed at the press conference shows Moneytree as a login option for Mizuho’s smartphone application. General manager of Mizuho’s incubation project team Nobuhisa Abe acknowledges the tie up as very good for consumers, “The most important thing is for individuals to see all of their data to understand their financial status.”

Previously limited to three months, with Moneytree’s API users will now be able to see all of their Mizuho bank accounts in one place and view their full transaction history. Credit card data is also going to be aggregated but this feature has no estimated release date. The partnership is a first step and Nobuhisa anticipates Moneytree technology to be used in other Mizuho companies.

Moneytree has come a long way from initially being shunned by the megabanks in 2012 and most of 2013. CEO Paul Chapman said last month in an interview that they were once told, “not a single Japanese person would register their accounts.”