Line, Mizuho to jointly set up internet bank in 2020

TOKYO: Messaging app provider Line Corp and Mizuho Financial Group Inc said yesterday that they would jointly set up an internet bank in 2020.

Through the tie-up, Mizuho is hoping to reach a broader customer base by offering financial services including loans, investment services and insurance products through smartphones, while Line, which boasts 78 million users in Japan, aims to build a new revenue source.

The two companies will initially set up a preparatory firm to be capitalised at 2 billion yen ($17 million), with Line holding a 51% stake and Mizuho taking up the remaining 49%.

Line CEO Takeshi Idezawa told a press conference, “We want to provide services closely related to people’s daily lives,” while Mizuho deputy president Toshitsugu Okabe said, “Our purpose is to build a customer base of relatively young generations which major banks typically have had difficulties reaching.”

Separately, Line said Japanese retailers offering Line Pay services would be able to process payments from Chinese tourists using Tencent Holdings Ltd’s WeChat Pay from early next year.

News of the tie-ups lifted Line shares to close up 13%, adding about $1 billion to the firm’s market value. The stock is still down more than 16% this year.

Mizuho and Tencent’s shares were flat. Tencent’s shares are down more than 25% this year, hammered by a prolonged regulatory crackdown on gaming, its core business.

With its growing number of Chinese tourists, Japan is increasingly attractive for China’s tech titans, with Alibaba Group Holding Ltd affiliate Ant Financial and ride-hailing firm Didi Chuxing announcing services in recent months.

Japan has been slow to move to cashless payments, with a rush of entrants such as PayPay, backed by SoftBank Group Corp, and Line Pay encouraging consumers to use QR code-based payments, which have become widespread in China, India and elsewhere.