See the original story in Japanese.

In August, Tokyo-based financial advisory startup Zuu fundraised 105 million yen (about $1 million) from four angel investors including Japan’s mobile i-mode web service inventor Takeshi Natsuno. Another news recently came in from the company.

Zuu recently announced that it has appointed Masaki Goto, the former CTO at Japanese learning startup Best Teacher, as CTO. In addition to the fact that Japan’s governmental IT promotion agency heralded him as a “talented genius” in the computer industry with his learning management system project, he’s also known for conducting at Ryukyu Philharmonic Chamber Orchestra in Okinawa.

Goto joined Zuu as a technical advisor to the board in July but he committed to the team upon the appointment at this time. Since its launch last April, Zuu has not been exposed to media much, so I have had no opportunity to hear from them despite many  years of acquittance with the company’s CEO, Kazunari Tomita.

Inviting such a talented engineer like Goto, what is Zuu trying to do? We had an opportunity to hear from Tomita and Goto at their office.

Financial services for consumers ranging from banking and brokerage to insurance are called retail finance. The internet penetration makes them possible to complete transactions online, in ways like online banking and online stock trading as well as  online insurance services. These are beneficial for providers in absorbing operational costs, in addition for consumers in terms of convenience in that they don’t need to visit a store.

However, this kind of financial products sold online requires consumers to have a high literacy in purchasing and ordering. It may give you a high flexibility of choice in favorable perspective, but you need to completely judge yourself in choosing which financial services you will adopt.

Seen globally, only 20% of financial services are provided via direct sales channels. The remaining 80% are sold via indirect sales channels from financial planners to insurance canvassers. It means the majority of consumers buying these financial products require someone’s advice upon purchase. No matter how things change along with time, the need to sell financial services via indirect sales channels will never disappear.

Zuu provides a matchmaking platform that connects consumers who want to buy financial services via indirect sales channels and providers like financial planners giving advice or selling these products. To date, while users have had to depend on their friends to find a good advisor, these advisors have had no way to approach their potential customers.

Having Goto as CTO, Zuu is trying to develop the core of this matchmaking platform. Tomita elaborated what they want to proceed from here:

Our business is connecting businesses and consumers. To make it possible, we developed a system of gathering advisors and launched 10 media sites for engaging consumers. We cannot disclose the details at the moment, but we’ll be working on a platform that keeps a tight grasp on consumers, which will be launched during the period from this year-end to the beginning of next year.

Zuu targets consumers with net financial assets worth ranging from $280,000 to $4.7 million, which means they are not super-millionaire but in the upper middle class that have some money in their bank  accounts. In terms of market scale, they are 10 million out of all 50 million households in Japan, so 20% of all households in the country are Zuu’s potential customers.

Hearing from Tomita and Goto, I came up with an idea that there’s a tendency commonly seen in typical fintech startups. As we previously heard from Crowdcast about their business, there are typically existing giants that target the top tier of a pyramid of users. Those in the bottom layer manage themselves so they are unlikely to use convenient advisory services. Therefore  startups can find a huge market potential in the middle range.

However, you wouldn’t expect so much on sales per customer in the middle-range tier. To make your business profitable, you will need to leverage crowdsourced forces and provide your services more efficiently. At the bottom line, Zuu targets the middle-tier customers in financial services while Crowdcast wants to acquire that in the expense reimbursement market.

As you can easily assume from the fact that  Zuu has as many as ten media sites, they have been focused on content development to date. They have exceeded one million monthly unique users in total, thus we can see they are one of the biggest operators of money issue-focused websites.

While Zuu is about a 25-person team including full-time and part-time workers as well as interns, only about five to six people out of them are being committed to systems    development under Goto. However, to accelerate development of the aforementioned platform, they are currently strengthening the engineering team, so the number of their engineers will exceed that of non-engineers soon.

Goto elaborated how they will acquire talented engineers:

Engineers who want to keep up with trends typically start their careers at a systems integration company, then hop around giants like Google or gaming developers, and now they are set for fintch startups. They may go to the healcare or IoT (Internet of Things) space later on, but I think people who want to do something new are gathering around fintech startups.

While it’s quite difficult to hire engineers in the startup scene, fintech startups may be more likely to gather good people because this is the hottest space not only for entrepreneurs and investors but also for engineers. It will be interesting to see what service Zuu will launch during the period from this to next year.