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Sumitomo Mitsui launches open innovation space in Tokyo’s most vibrant startup hub

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See the original story in Japanese. Sumitomo Mitsui Financial Group (SMFG, TSE:8316) earlier this month launched their first open-innovation base named Hoops Link Tokyo in central Shibuya, Tokyo. The group utilizes the venue to hold pitch events, meet-up, and seminars tying up with external organizations related to the startup ecosystem. At the beginning of the press conference held on the launch day, Jun Ota (Executive Vice President, SMFG) who presides over open-innovation activities of the group made an opening speech. Since established IT Innovation Department in SMFG two year ago, the group has been financially participating various new business where synergy effects with financial service can be expected, in order to activate the whole digital transformation within the group: SMBC GMO Payment (payments processing joint venture with GMO Payment Gateway),  Brees (barcode-based payment service developing together with NEC), Polarify (biometric authentication system jointly developing with NTT Data and Daon), Financial Link (artificial intelligence- and robotic process automation- powered business process outsourcing service jointly developing with NEC, to be soon rebranded into NCore). The group has been mainly cooperating with large enterprises so far, but aims strengthening of coordination with startups on the occasion of the establishment of Hoops Link. Also,…

Board members of SMFG at photo session

See the original story in Japanese.

Sumitomo Mitsui Financial Group (SMFG, TSE:8316) earlier this month launched their first open-innovation base named Hoops Link Tokyo in central Shibuya, Tokyo. The group utilizes the venue to hold pitch events, meet-up, and seminars tying up with external organizations related to the startup ecosystem.

Jun Ota (Executive VP / Chief Digital Innovation Officer, SMFG makes opening speech at the press conference

At the beginning of the press conference held on the launch day, Jun Ota (Executive Vice President, SMFG) who presides over open-innovation activities of the group made an opening speech. Since established IT Innovation Department in SMFG two year ago, the group has been financially participating various new business where synergy effects with financial service can be expected, in order to activate the whole digital transformation within the group: SMBC GMO Payment (payments processing joint venture with GMO Payment Gateway),  Brees (barcode-based payment service developing together with NEC), Polarify (biometric authentication system jointly developing with NTT Data and Daon), Financial Link (artificial intelligence- and robotic process automation- powered business process outsourcing service jointly developing with NEC, to be soon rebranded into NCore). The group has been mainly cooperating with large enterprises so far, but aims strengthening of coordination with startups on the occasion of the establishment of Hoops Link.

Also, on the same day, SMFG announced the cooperation with Work-Bench running accelerator for enterprises in the US and StartX, the accelerator of Stanford University. SMFG also unveiled it will start a startup acceleration program in 2018. The detail of the program is still under consideration but is expected to partly adopt conventional activities including Mirai Hackathon or the Mirai incubation initiative which were presented by SMFG or Mitsui Sumitomo Bank.

As open-innovation venues run by major banks, there are some similar cases within Japan, such as The Garage by Mitsubishi UFJ Financial Group (MUFG, TSE:8306) and Diagonal Run Tokyo by Fukuoka Financial Group (FFG, TSE:8354).  In addition, open-innovation activities can be seen recently in the whole financial service industry; Mizuho Bank established a lab within Finolab partnering with NTT Data for its open-innovation support program, Credit Saison (TSE:8253) launched DG Lab jointly with Digital Garage (TSE:4819) and others, JCB started operation of an acceleration program JCB Payment Lab supported by Quantum.

Interview with SMFG’s Goya Furukawa, Manager of Hoops Link Tokyo

Please tell us the history about how SMFG came to start Hoops Link Tokyo:

Goya Furukawa (IT Innovation Dpt., SMFG)

I had been sent to Los Angeles to study abroad until last year. In that neighborhood, there is Silicon Beach known as casual business base including Snapchat but I had received few information that startup business has become active in the Japanese financial industry.

By contrast, I daily heard news about the startups leading fintech or the fintech buyout by banks, such as Venmo known for the P2P money transfer.

Having an awareness of the problem about the difference between Japan and the US, I was assigned to a department in charge of fintech. The Japanese banks are still exclusive and our information given from Otemachi (where Sumitomo Mitsui Banking headquarters and fintech hub exist) will not reach to rising startups which we really deliver it to. To be closer with these startups, I thought we should establish a base in Shibuya.

What will you do in Hoops Link Tokyo?

The pure investment work is not main mission in Hoops Link Tokyo. Its first aim is to broaden business range or to be a base to create new business. Although we have a system covering strategic investment, I think it is important whether a startup deserves collaboration with us. Anyway, since our possible partners have not recognized it yet, our immediate aim is to meet them and stay close with them.

We will support doing something together or matching with another. If we received requests to collaborate with bank or group companies, Hoops Link Tokyo works as the window, as one and more SMFG staffers always stay there. We are also considering Office Hour-like service (walk-in consultation in the business hour) inviting staffers from group companies.

Geodesic Capital (the fund known as being founded by ex-the US Ambassador to Japan John Roos) and ERA (Entrepreneurs Roundtable Accelerator) are in cooperative relationship with us and will introduce us investment / support targets in the US. I want to realize cooperative activities centered on Hoops Link Tokyo; we have these funds to introduce startups having technologies / idea adoptable to our service or we can support these startups when they advance into the Japanese market.

Can you tell us the hours of operation and the frequency of events?

The hours of operation of Hoops Link Tokyo is from 9am to 9pm on weekdays. We plan to hold about three events in a week, mostly at night. Setting the third week of September as “executive week”, we will provide sessions over five consecutive nights having guests who performs as mentors in Hoops Link Tokyo (accepting reservation for participation on the website).

We have to take priority of holding events initially, but I want everyone to recognize where we are and which kind of network we have. I will be glad if they think that bank is an open environment than expected or are concerned about the possibility of collaboration.

Do you have KPI (key performance indicator)-like measure for Hoops Link Tokyo?

We did not set KPI for Hoops Link Tokyo. However, it would be meaningless if it does not achieve any long-term outcome. To stretch a point, the final KPI of Hoops Link Tokyo will be the exit how we succeeded in business creation.

Photos of Hoops Link Tokyo

You can mark Shibuya West Branch of Sumitomo Mitsui Banking, next to Mega-Donki. Hoops Link Tokyo is on the 6th floor of the building.
Exiting the elevator, you can see the entrance decorated with photographs in sepia tone, bringing back memories of old good days.
Under the theme of challenges in difficult situations, Hoops Link Tokyo is designed in the motif of a bar in 1920s during prohibition. The bookshelf works as a hidden door.
Each meeting room is named after cocktails such as Grasshopper or Bluesky.
Kitchen will be useful in events, stocking a large amount of liquers.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy

Japan’s Sumitomo Mitsui showcases five finalists from first ever FinTech hackathon

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See the original story in Japanese. In October Sumitomo Mitsui Banking Corporation (SMBC) held a demo-day for its first ever the Mirai Hackathon event. The five finalists took the stage giving presentations in front of judges, bank employees, and representatives from the affiliate companies of Sumitomo Mitsui Financial Group (SMFG, TSE:8136). For this hackathon SMBC made 27 sample APIs available for use in the creation of the team’s PoCs and began accepting applications from July 22nd. About 30 teams entered, with an explanation about API on September 3rd, followed by the hackathon, as well as mentoring, on September 17th, with 5 teams remaining as finalists in the end. The judges that participated in the demo-day were also responsible for mentoring the finalists. The following is a list of the participating judges: Hironobu Azuma (General Manager of Convergence Strategy Cluster / Research & Consulting Division, The Japan Research Institute) Keisuke Tatsuoka (Partner, Global Brain) Yusuke Murata (General Partner, Incubate Fund) Masaru Yoshioka (Senior Executive Officer, Management Department of Strategic Business, Innovation Partners Division, GMO Payment Gateway) Hiroyuki Koike (Operating Officer, Digital Innovation Business, IBM Japan) Kentaro Sakakibara (CEO, Samurai Incubate) Jun Ota (Senior Managing Executive Director, Transaction Business Division, SMBC) Shinichi…

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See the original story in Japanese.

In October Sumitomo Mitsui Banking Corporation (SMBC) held a demo-day for its first ever the Mirai Hackathon event. The five finalists took the stage giving presentations in front of judges, bank employees, and representatives from the affiliate companies of Sumitomo Mitsui Financial Group (SMFG, TSE:8136).

For this hackathon SMBC made 27 sample APIs available for use in the creation of the team’s PoCs and began accepting applications from July 22nd. About 30 teams entered, with an explanation about API on September 3rd, followed by the hackathon, as well as mentoring, on September 17th, with 5 teams remaining as finalists in the end. The judges that participated in the demo-day were also responsible for mentoring the finalists.

The following is a list of the participating judges:

  • Hironobu Azuma (General Manager of Convergence Strategy Cluster / Research & Consulting Division, The Japan Research Institute)
  • Keisuke Tatsuoka (Partner, Global Brain)
  • Yusuke Murata (General Partner, Incubate Fund)
  • Masaru Yoshioka (Senior Executive Officer, Management Department of Strategic Business, Innovation Partners Division, GMO Payment Gateway)
  • Hiroyuki Koike (Operating Officer, Digital Innovation Business, IBM Japan)
  • Kentaro Sakakibara (CEO, Samurai Incubate)
  • Jun Ota (Senior Managing Executive Director, Transaction Business Division, SMBC)
  • Shinichi Mukai (Division Chief, Transaction Business Division, SMBC)
  • Tomoaki Nakayama (General manager, IT Innovation Department, SMBC)

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Each team’s ideas were evaluated and reviewed based on six elements: cooperation with various industries (originality), need, viability, feasibility, enthusiasm, and product. Furthermore, the winner of this hackathon is invited to the “Mirai 2017” pitch competition jointly by SMBC and The Japan Research Institute, which will take place on December 20th.

First Prize winner: Grow up care system, nursing care facility office support service by Glory

Supplemental Prize: “Mirai Hackathon” Original VISA Prepaid card for 100,000 yen (about $1000 US), Participation rights for the Mirai 2017 pitch competition

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In long-term care facilities, when care receivers need to use money such as for shopping, there are measures for managing money received from their family members, but the paperwork is complicated and money troubles unceasing.

In order to solve such problems, Glory developed a service that provides facial recognition-based login, electric seal verification, simple mobile input, in combination with notification of transaction deals for families. All together, it forms a service that eradicates the financial trouble between long-term care facilities and their residents (care receivers) by solving the complicated petty cash payments on the facilities’ side.

The care facilities do not take over the bank books or personal seals from their resident’s families, but through enhanced security they can manage withdrawals, while allowing the family to monitor these activities in real time. For the elderly who cannot judge for themselves, by leveraging the adult guardianship system, it becomes possible to have an even more flexible operation.

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Best Quality award winner: MANA (Meta Automatic New Addition), adding meta-info to payment/reception details by Money Forward

Supplemental Prize: Mirai Hackathon Original Visa Prepaid Card for 25,000 yen (about $250 US), Rights to an exhibition booth at the Mirai 2017 event

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Within a company, information concerning payments to suppliers is tied to the context, however context is lost when it becomes deposit and withdrawal information for financial institutions. For this reason, understanding what the deposits and withdrawals were intended for from the bank statements and then erasing it becomes cumbersome.

By imparting meta-information (transaction content) onto deposit and withdrawal information with Mana, it improves the convenience of transactions between companies, and solves the problem of erasing the payment details. Through the use of Mana users on both the billing and payment sides can share this meta-information among other details, and even if the other party is not a Mana user it is possible to generate a billing invoice on the platform. From the claims side users can ascertain their accounts receivable balances and scheduled payment amounts. On the payment side, the billing and transfer activities can be directly connected, thus reducing the amount of tasks. And so, merits such as understanding the planned withdrawal amount and balance after withdrawals are born.

It is possible to imagine that the affinity between demographics like companies that are not using EDI or are not categorized as large, along with small and medium-sized companies who use Money Forward’s signature service MF Cloud, would be high. The judges expressed the opinion that rather than providing this as a stand-alone service, it would be more convenient on the banking side to integrate it into their online banking system.

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High Growth award winner: Tipping tool for onilne content creators by Bugnitude

Supplemental Prize: Mirai Hackathon Original Visa Prepaid Card for 25,000 yen (about $250 US), Rights to an exhibition booth at the Mirai 2017 event

1st-mirai-hackathon-demoday-winner-bugnitudeWhen the content found on blogs or online video sites is useful or interesting, users of this service can press the “Like” button to show appreciation in the form of money. While this service could be termed the modern day “tipping”, it can also be used to support donations for offline events, such as fireworks displays put on by volunteers. Also, in the period before any given content’s evaluation rises due to many users pressing the button, the team came up with a way to motivate users by awarding reward points to users who press the button before others.

The judges pointed out the similarities to Japanese social tipping platform Grow!, which launched in 2012 and has since shutdown. Since there was no bank supported API during the time of Grow!, it may be possible to produce a different user experience, and the judges advised them that it is vital to decide how and which media they will partner with in expanding their service.

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API Award winner: Furikome Now!, an instant way to collect payments when eating out with friends by Team Gap (tentative)

Supplemental Prize: Mirai Hackathon Original Visa Prepaid Card for 25,000 yen (about $250 US), Rights to an exhibition booth at the Mirai 2017 event

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Before or after occasions, such as drinking parties, when you want to split the bill, “Furikome! Now” is a platform that makes it possible to intuitively recognize the context of payment details, thus making simple and secure payment collection possible between individuals. For example, if the person responsible for collecting the payments knows only the e-mail addresses of attendees it is possible to prompt them to transfer their payments, making it unnecessary to install an app or prepare dedicated devices. For payments, it is possible to determine the context of payment details based on attached photos (for example, based on the fact that the photos are from a drinking party, the bill should be split to reflect this) and it is also not required for the money collector to input details such as account numbers, etc.

One interesting feature was in the case that the money transfer does not occur within the fixed period of time, attendees would be automatically reminded by telephone, which is possible through the use of Twilio. Secondarily, Team Gap believes from trend data related to user’s transfers, artificial intelligence could analyze the emotions and conditions of users at the time of their transfers making it possible to propose measures to improve the recovery rate.

Although they obtained a lukewarm evaluation based on the convenience of the features, because there was the hint of the possibility of remittance fraud, the judges advised them to seek continuous improvement in their design and naming.

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Enthusiasm Award winner: Herukan, a platform that helps companies gain productivity by offering mental healthcare for employees, by Bluetech

Supplemental Prize: Mirai Hackathon Original Visa Prepaid Card for 25,000 yen (about $250 US), Rights to an exhibition booth at the Mirai 2017 event

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Herukan is an app for employees of companies concerning the management of health services and the promotion of them. In order for users to maintain their motivation, it awards credit card points for goals achieved, and imposes penalties for missed goals. It goes further than the iPhone’s HealthKit by adding a unique workout feature that calculates rewards and penalties based on users’ measurements.

The cost is 4,980 yen per employee and fronted by the company, of which 3,100 yen per month is deposited and used in features such as point refund for target achievers. While the judges pointed out that this price may be too high, it was decided upon after referencing non-obligatory welfare costs, and the team believes it is within a reasonable price range.

Upon doing a big data analysis of the collected data, it could be sold to insurance companies, sports manufacturers, beverage manufacturers, and so on. In addition, in response to user trends on the app they could post reward advertisements, allowing them to further monetize.

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At the doorstep interview following the conclusion of the presentations from the five teams, Koichi Iguchi, IT Innovation Department’s Deputy Director at SMBC, commented:

From the perspective of a banker, they brought a lot of ideas that were not easy to come up with, so it became a great learning opportunity for us.

All the APIs used during the hackathon event were provided on a sample basis to participating teams, but to connect this to actual business there will be a need to develop formal APIs. For SMBC, while advancing the open innovation together with fintech startups, it became a great opportunity for answering questions like what kinds of APIs are required, what kinds of business models are possible, and what kinds of security problems will present themselves.

At this event, both SMBC and Sumitomo Mitsui Card respectively provided API samples related to banks and credit cards. In the future, there is a possibility that other business corporations concerned with separate industries and operating under the umbrella of SMFG will become involved in similar activities.

1st-mirai-hackathon-demoday-judges-and-presenterIn terms of movements made by Japanese financial institutions for open innovation, The Bank of Tokyo-Mitsubishi UFJ (BTMU) has started running a fintech-focused  accelerator, among others, Mizuho Bank is collaborating with NTT Data in support of open innovation, Japanese credit company Credit Saison (TSE:8253) opened DG Lab with Digital Garage (TSE:4819), while credit card giant JCB has announced the start of their accelerator program JCB Payment Lab.

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Translated by Amanda Imasaka
Edited by Masaru Ikeda