Mizuho, LINE Increase Investments In Bid To Launch ‘Smartphone Bank’

LINE Corp. and Mizuho Financial Group have agreed to increase their investment in LINE Bank Preparatory Co. and to make changes to its management structure as part of creating a new bank in Japan. The companies said in a press release that the goal is to set up “a user-friendly ‘smartphone bank’ connected to the LINE app” in fiscal year 2022, subject to approval by relevant authorities.

The latest steps will be taken through their subsidiaries, LINE Financial Corp. and Mizuho Bank. According to the release, LINE Financial and Mizuho Bank would make an additional 12 billion (Japanese yen) investment in LINE Bank Preparatory Co., increasing its capital reserve to JPY 16.5 billion. In addition, the two companies agreed that, with the goal of being equal partners, Mizuho Bank would appoint a co-CEO. Also, the subsidiary’s board would be made up of “four directors and auditors appointed by LINE Financial and four by Mizuho Bank.”

Japan’s LINE Financial and LINE Corp. provide users with various FinTech services. These include LINE Pay, a money transfer service.

Mizuho Bank said it has “one of the largest customer bases in Japan and an extensive international network covering financial and business centers around the world.”

The release said that the new venture, established in 2019, “strives to provide financial services via smartphone to meet the needs of users of all ages.” The companies said that “the need for such services has grown with the wider use of cashless payments since the spread of COVID-19 and the acceleration of the digital transformation.”

According to the partners, the joint venture would build on the LINE app’s 86 million users in Japan. The release added that “instead of having to visit a bank, the new bank aims to become the users’ primary banking service.”

Last year, mobile payments firm Boku said it would partner with LINE Pay to allow Japanese users to pay for goods and services through the Boku platform.

“Both the public and private sectors are taking action to shift Japan’s longstanding cash society toward a cashless one,” said Hisahiro Chofuku, CEO and president of LINE Pay, at the time.