TOKYO -- Mizuho Financial Group will establish an incubator for virtual currency and AI-based loan-screening ventures. It is the latest move by one of Japan's big banks to try to keep up with advances in financial technology, or fintech.
Mizuho will soon begin talks with WiL, a California-based startup, to establish the incubator as early as June, with capital of up to 100 million yen ($896,900). WiL will become the largest shareholder, with Japan's Itochu, Sompo Japan Nipponkoa Insurance, Dai-ichi Life Insurance and other parties having stakes of a few percent.
Mizuho will limit its investment ratio to less than 15% so that the company will not become an equity method affiliate, the net losses of which have to be reflected in a parent company's earnings. Were the new company to be made an equity method affiliate, it would also be required to conduct audits, payments and business decisions in accordance with corporate accounting standards. This could slow the pace of technical development.
The incubator's main purpose will be to nurture fintech startups, but it will also consider takeovers and initial public offerings should any of its fledglings turn profitable.
Mizuho wants the company to play another role as well -- as an issuer of electronic money. In carrying out this duty, the concern is to partner with Japanese companies operating in Southeast Asia.
Mizuho will also assign some of its digital technology development engineers to the incubator, which is to have 50 to 60 employees in all.