Japanese Fintech Smartpay to Launch Next Phase of Consumer Finance via Open Banking

Japan-based Fintech Smartpay has launched Smartpay Bank Direct, the country’s first digital consumer finance service that “allows customers to pay for online installment purchases straight from their bank accounts.”

Smartpay Bank Direct “emphasizes user security while delivering convenience for the consumer, through a network of 67 partner banks across Japan.” Smartpay claims it is Japan‘s first digital consumer finance company “to utilize Japan’s open banking system.”

Smartpay was founded in June 2021 “by seasoned industry professionals who had previously held leadership roles in Instagram, Standard Chartered Bank, Facebook, Stripe, Adyen and Mastercard across the Asia Pacific, and MENA regions.”

The founding team has “worked in digital payments, banking, and fintech which gives the company the right talent to transform the digital consumer landscape for users seeking reliable financial products and payment solutions.” They also “have experience of working with regulators and central banks which is crucial when building a financial ecosystem.”

While Japan remains the third wealthiest country in the world, “it has one of the highest credit card penetration rates in Asia, with over 60% of transactions completed in cash.”

Smartpay’s application has “received wide acceptance from consumers and merchants that prefer beautifully uncomplicated digital payments, which supports the transformation of a cash-based society into a digital one.”

The company’s strategy was “built in two phases.” The first phase was “focused on financial inclusion, and helping those that don’t have access to credit, to join the digital BNPL economy.”

It also solved the issue of cash usage and “created a platform and an ecosystem to move towards a paperless payment system that would be more efficient.”

Smartpay is “moving into the next phase of its digital consumer finance journey, which is focused on targeting middle and high-income users and offering them smart financial solutions that are safe, convenient, fast and create real value for the entire ecosystem.”

Smartpay’s founder and CEO Sam Ahmed said:

“We believe we are driving digital consumer finance to the next phase of its maturity. ‘Buy now, pay later’ has had to grow up from the prospective of a business model, profitability, and consumer value proposition.”

The company’s adaptive UX, accessible technology, eKYC (electronic know your customer), dependable security “features and sound business model is built for users that have a need for efficient digital finance solutions, which will transform markets with similar conditions, high inflationary pressures on consumer psychographics, and demographics.”

High-income consumers “who want to extend their monthly cash flow with smart, digital point-of-purchase, cash flow management tools, and who want to have a better control over their month spending, have been most receptive to Smartpay’s digital solutions.”

Its aspirational feel and product features “appeal to the high-income segment who have disposable incomes and want to align with smart digital UX brands.”

The UX has been “put together after much consideration, and its design features make consumers feel trusted and accepted for their unique individual traits, instead of being thrown into a mass-made product that does not distinguish between customers.”

By targeting this segment of society, Smartpay’s unit economics “works well as these are low-risk and high-value customers with average transaction value of USD200, non-performing loan (NPL) rates of less than 1%, and who want to avoid a bad credit rating and nonpayment on debt obligations.”

The monthly repeat rate of these consumers “has already reached approximately 20%.”

This combination of high-income users and high-value design “makes Smartpay a premium fintech company.”

Smartpay’s founder and CEO Sam Ahmed said:

“We knew we were on the right track when our key merchant, CEO of TRiCERA Tai Iguchi, had feedback stating: ‘You are the Apple of digital consumer finance, your UX is beautifully designed and makes the consumer feel like you trust them, and respect who they are. This is in a market where other consumer finance companies have made customers feel they are not trusted and undervalued.'”

While currently the focus is on Japan, KSA and UAE markets, in the medium term Smartpay will “look towards Singapore, South Korea, Taiwan, and other markets in Southeast Asia and MENA.”

These markets all have the five common factors which are central to Smartpay’s business model:

  • Specific consumer psychographics which include a tech savvy population, smartphone and internet access, high disposable income, increased consumption, and high rates of tech adaption
  • An economy that is undergoing a digital transformation
  • Merchants that need help to accelerate a successful digital transformation
  • Legacy banks that have been disrupted by digital first solutions which have taken away their relevance and limited access to key consumer data
  • Governments and regulators that want to work with established digital financial solutions that have existing global partnerships (proof of quality and security) and credible local partners (proof of local interests)

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