Shota Horii, his twin brother Yuta Horii and Jun Taketani co-founded SmartBank in 2019 after selling their previous startup Fablic, a Japanese online secondhand marketplace, to Rakuten in 2016. While operating Fablic, the trio found that many users still used cash to pay and manage their day-to-day finance. The founders wanted to address the issue in the consumer finance industry in Japan and launched SmartBank.
The Japanese fintech startup said today it has raised a $20 million (2 billion JPY) Series A funding round led by Globis Capital Partners with participation from Z Venture Capital, Mitsui Sumitomo Insurance Venture Capital, and DBJ Capital. Existing investors, including Global Brain, and ANRI, also participated in the round.
SmartBank wants to enable anyone to manage finance, “from everyday spending to planning for the future” by offering its digital finance management service B/43, which is a Visa prepaid card and personal finance management app.
The company is similar to challenger banks like Brazil’s Nubank and UK company Monzo, but its key differentiator (in terms of functionalities) is that it does not just focus on individuals but also offers joint accounts for couples. In addition, it will soon release services for parents and kids to manage finance together, the startup says.
In Japan, banks do not offer joint accounts for couples. As the number of dual-income households is increasing in the country, it is more inconvenient for them to keep the overall flow of money and savings compared to single-income families, Horii said. The startup has conducted over 250 user interviews and estimated that as many as 15 million double-income households face challenges managing household finance, Horii continued.
“Unlike other countries, traditional banks in Japan don’t offer joint accounts,” SmartBank CEO Horii told TheGreatly. “However, we do not operate under a banking license and leveraging the fund transfer license. We are able to offer accounts that users can share and jointly use with their families.”
The latest funding, bringing the company’s total raised to $30 million, will be used to further expand its B/43 service. Users can check all the spending, recorded and visualized in real-time in the app, by simply charging their monthly budget onto the B/43 app and making payments.
The company claims B/43 joint account service’s retention rate is almost 100% after using the service for three months. Within a year since the B/43 launch in April 2021, its monthly transaction volume has reached several million USD, according to the company.
The Japanese startup also says its total number of downloads exceeded 100,000 in December, and now it aims to reach the total number of downloads of 1 million by the end of 2023. The company did not disclose its valuation and monthly active users (MAUs).
SmartBank makes revenue sources in two ways: one is the interchange reimbursement fees that the company receives from Visa every time its users make a transaction using their card. Another is through lending. The startup offers Charge Now Pay Later, which enables users to borrow up to 50,000 JPY (approximately $365) and charge their account balance. The users pay the amount they borrowed with a commission fee, which is the company’s revenue source, at the end of the next month.
SmartBank aims to extend its service from managing day-to-day living expenses to savings and investments in the mid to long term. The company has a team of 19 people.