Japanese Banking Giant Mitsubishi Joins FinTech Innovation Race Launching New Research Unit

As reported by Bloomberg, the Mitsubishi UFJ Financial Group Inc. (MUFG) has set up a unit to research and develop new financial technologies—the first of its kind for a major Japanese bank. The information is not public yet. However, as sources shared with Bloomberg, the team of 15 employees in Tokyo and Silicon Valley will start the FinTech Innovation Lab planned to be unveiled on January 8. The Lab will be working with FinTech companies as well as with educational and research institutions using Mitsubishi UFJ resources. Available resources will include securities and trust-banking units aimed to develop financial products and services.

MUFG is setting up the division in physically separate locations from the existing banking business to ensure the unit’s freedom and independence, which the traditional giant should not pressure.

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It seems that the Japanese vision of work culture with a strict hierarchy, suits, and ties will give way to the innovative spirit with a casual dress code to help foster a startup culture and enable closer cooperation with outside ventures, as sources shared with Bloomberg.

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Sources said that the Tokyo-based MUFG is also considering adding a third location for the unit in a major city in Asia.

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MUFG has been investing in innovation at scale before this news. For example, Japan’s biggest bank uses IBM’s artificial intelligence machine Watson to automate call centers. Moreover, MUFG tested the humanoid robot NAO, developed by Aldebaran Robotics SAS, in some of its branches.

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Announced at and the beginning of 2015, NAO was claimed to be able to answer most basic customer-service questions in 19 languages and analyze customers’ facial expressions and behavior.

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Moreover, in November 2015, MUFG also announced that it had launched MUFG Fintech Accelerator, an acceleration program for startup companies with outstanding business ideas and technologies to establish innovative financial services leveraging ICT (Information and Communication Technologies).

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As stated in the official press release, the objective of the MUFG Fintech Accelerator program is to stimulate innovative ideas to create new businesses with startup companies without any limitations of traditional financial processes. Furthermore, the Bank of Tokyo-Mitsubishi UFJ intends to involve other MUFG group companies in this program.

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The accelerator program offers 4-months long intensive business acceleration for the selected startup companies. Experienced consultants and mentors are mentoring the selected companies to improve their business models. Logically, BTMU considers business cooperation and investment in startups. The second meetup event will be held on January 18th, 2016. The selection process will be completed in February, and by the beginning of March, the program will be launched.

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The areas of particular interest are Payments, Lending, Asset Management and Investment, Digital Banking, Trading, Risk Management, Security, Digital Marketing, or any solutions pertaining to financial services.

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MUFG is one of the largest financial institutions actively exploring relationships with FinTech in different forms. Realizing the potential threat for their business, banks are looking for a response. Last year was all about emerging FinTech. Only in December 2015, FinTech firms raised almost a billion around the world. The year 2016 may be slightly different, with powerful financial industry players collaborating to shift the balance. However, one of the prevalent ways to counter the threat is an Innovation Lab/FinTech Research Unit or any other separate establishment within an organization that focuses on bringing the new blood to the traditional workflow stream.

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