SBI Sumishin Net Bank’s IPO will be an important milestone for banks in Japan, many of which lag behind international rivals in their digital offerings.
On February 15, the Tokyo Stock Exchange (TSE) approved the listing of SBI Sumishin Net Bank. Founded in 2007, it is Japan’s first digital-only bank, and it’s looking to raise more than $1 billion in a share sale before its listing on March 24.
Funds raised from the IPO, which is the biggest Tokyo listing since SoftBank’s $21 billion IPO in 2018, will be used to expand the company’s banking-as-a-service (BaaS) business for B2B customers, the bank announced. BaaS services deploy technologies such as artificial intelligence (AI), blockchain, big data and cloud computing to enhance services, security and the user experience for digital banking applications.
SBI Sumishin Net Bank’s IPO will be an important milestone for banks in Japan, many of which lag behind international rivals in their digital offerings, having chosen to maintain over-the-counter, in-person services in brick-and-mortar branches, instead of fully embracing digital-only platforms.
The digital bank is a 50-50 joint venture between Sumitomo Mitsui Trust Bank and SBI Group, a financial services company. Thus far, clients using its services include the Japan Airlines Group, which in April 2020 launched JAL Neobank, a BaaS-based platform.
Later this year, e-commerce company Rakuten Group will list Rakuten Bank, its banking division, on the TSE. The listing follows a decision by the Japanese government last year to establish a Digital Agency, aimed at strengthening the digitization of legacy industries.
However, investor appetite has cooled due to the ongoing Covid-19 pandemic, geopolitical uncertainty and looming interest rate hikes. This year, the TSE listed five IPOs priced at $36 million, compared to seven in the same period last year, which were priced at a total of $252 million, Bloomberg reported.