Line, a Japanese messaging application, announced plans to form a new bank with Mizuho Financial Group this Tuesday. The company also said that it would be partnering with Tencent, the owner of WeChat, to provide mobile payments services to Chinese customers.
According to Reuters, the new bank is still subject to regulatory approval. Assuming it can get a thumbs up from Japanese financial authorities, the bank is likely to start providing services in 2020.
What exactly those services will be, remains unclear but Line will hold a 51 percent stake in the new venture when it is established.
Separately, the partnership with Tencent will mean Japanese companies will be able to accept payments from users of WeChat Pay. That may not sound like much but, according to China Daily, over 7 million Chinese tourists come to Japan every year.
Aside from site-seeing, many of them visit Japan to go shopping. And given that close to 900 million Chinese people use WeChat, it’s likely that a substantial number of those heading to Japan will find it convenient to make payments via the mobile application.
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Line – big in finance
Though the establishment of a bank is a fairly big step for the company, Line is no stranger to the financial services industry. What started as a messaging application back in 2011 has ballooned into a huge corporation, providing an array of different services to consumers.
Alongside peer-to-peer payments, a taxi ordering service, and merchant services, the company has, in the past year, launched cryptocurrency, insurance, and brokerage solutions.
Back in May, the firm partnered with another Japanese banking giant – Nomura – to provide a securities brokerage and investment advisory service. A month later, Line announced the launch of Bitbox, a cryptocurrency exchange, in Singapore.
The expansion of a messaging application into the financial services industry may seem curious, but in many ways, it’s a logical step for both Line and the banking firms it has partnered with.
A messaging application is difficult to profit from and, after a certain point, it’s difficult to grow your client base. By branching out into finance, Line can find new sources of income.
For banks, Line is a new means by which to access a young client base – something Japanese firms have struggled to do.