Financial technology companies, also known as FinTech companies, are firms that use software to provide financial services. These companies are easing payment processes, reducing fraud, saving users money, promoting financial planning and in short reshaping the financial sector.
While FinTech companies like LendingClub Corporation LC are gaining immense popularity due to peer-to-peer models, crowdfunding, and contactless payments, traditional companies have started collaborating with these virtual start-up firms in a bid to capitalize on the online boom.
One such strategic deal has been entered into by the Japanese bank – Mitsubishi UFJ Financial Group Inc. MTU with a Tokyo-based financial technology venture – Finatext Ltd. Through this collaboration, Mitsubishi UFJ looks forward to augment investment trust sales providing information with the help of a smartphone application – The Fundect app.
The Fundect app developed by Finatext Ltd., helps users select investment trusts and exchange information about the funds, said Ryota Hayashi, chief executive officer of the Tokyo-based venture. It shows banner advertisements for the bank. “This product meets the needs of users immediately, which is something that banks and securities firms have been lacking,” Hayashi said. “Our first goal is to get 100,000 downloads.”
This collaboration is the first ever partnership for Mitsubishi UFJ with emerging fintech providers. Moreover, the spokesman for Mitsubishi UFJ in Tokyo has also confirmed the transaction.
Japanese banks are striving hard to augment fee income and exploring different revenue avenues as low interest rates have weakened margins on loans. Moreover, slow growth in Asia has also limited credit opportunities. Therefore, with the Japanese stocks recording three consecutive years of gain and the same expected this year, investment trusts have gained popularity.
Mitsubishi UFJ has entered into an industry that is set to revolutionize the financial services sector in the future. Forming partnerships with fintech companies will help Mitsubishi UFJ offer enhanced services to their clients. Also, the partnership will mark a step forward by these traditional companies to adopt the new online technology. However, the competitive landscape is a cause of concern.
Currently, Mitsubishi UFJ carries a Zack Rank #4 (Sell). A couple of better-ranked foreign stocks include Barclays PLC BCS and Grupo Financiero Galicia S.A. GGAL both with a Zacks Rank #2 (Buy).
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