Architectural Cases

Two prominent Japanese financial entities, Sumitomo Mitsui Financial Group (SMFG) and SBI Holdings, have unveiled plans to create a wealth management joint venture. This collaboration aims to elevate the functionalities of SMFG's Olive platform, which is a digital service that unifies banking, payment, and investment solutions. The new company, scheduled to begin operations in spring 2026 following regulatory approval, will be co-owned by multiple stakeholders including SMBC Nikko Securities, SBI Securities, and Sumitomo Mitsui Banking Corporation among others. Building on their existing partnership formed in 2020, this venture seeks to adapt to evolving customer preferences influenced by digitization while offering personalized advisory services.

The proposed alliance marks a significant step towards enhancing customer experience through technology integration. Since forming their initial partnership in 2020, these organizations have launched various initiatives such as the Sumitomo Mitsui Card Accumulated Investment program in 2021, which has seen impressive growth with over Y85 billion in monthly transactions. Moreover, SBI Securities was successfully integrated into the Olive app in 2023, reaching more than 5.7 million users. In response to changing market dynamics where customers increasingly prefer online transactions but still seek expert advice for complex decisions, the upcoming "Olive Infinite" service promises a hybrid approach combining digital tools with human consultation.

This innovative service will enable clients to access advisory support through AI chat, phone calls, video meetings, or face-to-face interactions at designated lounges. Customers can select consultants based on specialized knowledge and designate preferred advisors from subsequent sessions onward. Additionally, the service will provide visualization capabilities for multi-bank assets via Money Forward and streamline securities transactions within the Olive app itself. These enhancements aim to address shifting consumer demands effectively.

Beyond individual efforts, broader trends indicate increased collaboration across Japan's securities sector. Policymakers are encouraging retail investors to diversify into riskier asset classes like equities amid demographic challenges posed by an aging population. For example, Rakuten Securities recently partnered with Mizuho Securities to establish a similar joint venture last year.

By leveraging advanced technologies and fostering strategic alliances, SMFG and SBI Holdings position themselves at the forefront of transforming traditional financial services into modern, customer-centric experiences. Their initiative not only reflects current industry shifts but also anticipates future needs as digital adoption continues to rise globally.

New research highlights the vast economic potential of enhancing digital finance innovation in Australia. If fully realized, this could contribute 1% to the nation’s annual GDP and open up a $4.6 billion opportunity within foreign exchange markets alone. Collaboration across industries and regulatory reform are pivotal to accelerating the adoption timeline and unlocking these benefits.

The study identifies multiple avenues for growth, including foreign exchange, cross-border payments, investment funds, private credit, public debt, and private equity. Despite possessing strong financial markets and technological capabilities, Australia faces challenges such as outdated infrastructure, unclear regulatory standards, and resistance from traditional sectors. Addressing these barriers through coordinated action is essential to capitalize on the opportunities presented by digital finance innovation.

Pioneering Opportunities in Digital Finance

Recent findings unveiled at the Australian Digital Economy Conference emphasize the immense potential of advancing digital finance innovation. The most promising prospects lie in foreign exchange markets, which offer an estimated annual gain of $4.8 billion, alongside cross-border payments generating $7.6 billion annually. Other asset classes also present significant opportunities, with investment funds, private credit, public debt, and private equity contributing billions more to the economy.

By integrating blockchain technology into financial systems, Australia can streamline transactions, reduce costs, and eliminate intermediaries. This shift not only enhances efficiency but also creates new economic possibilities. For instance, tokenization of niche markets like carbon credits can revolutionize trading processes. Talis Putnins, chief scientist at the Digital Finance Cooperative Research Centre, stresses the importance of collaborative efforts to position Australia as a global leader in digital finance. However, current projections indicate that without accelerated progress, only $1.8 billion in economic gains will be achieved by 2030.

Overcoming Challenges to Realize Full Potential

While Australia boasts robust financial markets and advanced technological capabilities, several obstacles hinder its ability to fully harness the benefits of digital finance. Outdated infrastructure, ambiguous regulatory frameworks, and reluctance from certain sectors to adopt tokenization remain major barriers. These issues prevent the country from realizing its estimated $12 billion digital finance potential.

Kate Cooper, CEO of OKX Australia, underscores the necessity of licensing clarity and resolving debanking problems to foster innovation. She emphasizes that clear regulations would boost investor confidence and unlock capital inflows. Furthermore, the introduction of Treasury’s digital asset regime must prioritize speed to ensure effectiveness. Amy-Rose Goodey, CEO of DECA, advocates for coordinated action to overcome these challenges. By fostering collaboration between stakeholders and implementing strategic reforms, Australia can expedite its journey toward becoming a digital finance hub. The groundwork laid thus far provides a solid foundation for informed decision-making, enabling the nation to shape its digital economy’s future successfully.