TOKYO -- Sumitomo Mitsui Financial Group will develop a way for consumers to verify their identity using their fingerprints or voice when making online payments, taking advantage of looser restrictions on Japanese banks' ability to invest in financial technology businesses.
The megabank will own a majority stake in a new fintech venture that will develop the technology. Tokyo-based NTT Data and Irish biometrics company Daon will also invest in the 20-person company, which will launch this spring and start operating as early as July.
Once the platform is developed, the venture will pitch it to online shopping and travel booking sites, electricity and gas companies, insurers and others. Instead of inputting a password, users will be able to authenticate payments with biometric features like fingerprints, voice and facial features that they will register with a smartphone app.
The platform could provide e-commerce operators a cheaper alternative to developing their own biometric authentication systems. In addition to receiving usage fees from businesses, Sumitomo Mitsui hopes to gain access to a broader customer base to sell its other financial services.
For a long time, Japanese banks and bank holding companies could take stakes of only up to 5% and 15%, respectively, in non-financial businesses. Thanks to a revision to banking law coming into effect Saturday, banks approved by Japan's Financial Services Agency can invest more in fintech businesses.
Sumitomo Mitsui plans to send its application to the financial watchdog on Monday. It is likely to become the first bank to take advantage of the rule change.