July 16, 2024

The Rakuten Group of Japan intends to combine its banking and fintech companies.

April 02, 2024
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In an effort to get a "competitive advantage" and maximize its "allocation of resources," the massive Japanese e-commerce company Rakuten plans to reorganize its fintech activities by merging all of its fintech companies, including Rakuten Bank, into a single, cohesive organization.

As a result of the merger, Rakuten Bank would become the parent company of Rakuten Card, Rakuten Securities Holdings, Rakuten Insurance Holdings, and other Rakuten-owned fintech companies.

"Leverage group synergies to maximise the lifetime value of each member and minimise customer acquisition costs, thereby maximising group profit" is the stated goal of the restructuring, according to Rakuten Group.

Furthermore, the company claims that merging its fintech divisions would facilitate more adaptable decision-making and enhanced cooperation throughout its network, particularly in the domains of artificial intelligence and data integration.

A Memorandum of Understanding (MOU) was signed by the executive board of Rakuten to talk about the procedure. Additionally, a special committee to guarantee fairness in the reorganization has been created by the bank's board of directors to prevent conflicts of interest between Rakuten Group and Rakuten Bank.

Additionally, Tokyo-based Rakuten has said that, should the reorganization plans be successful, Rakuten Securities Holdings may have to postpone its preparations for an initial public offering (IPO), while Rakuten Bank will remain listed on the Tokyo stock exchange following the integration.

The firm reorganization, which is scheduled to begin in October of this year, will also need the required regulatory authority permits and licenses.

Rakuten emphasizes that it has the right to choose not to follow all or some of the suggested adjustments, but it hasn't ruled out doing more restructuring.

The recent announcement by UK-based fintech ieDigital of a similar approach is in line with Rakuten's plan to combine its fintech activities under a single organization. Abaka and Connect FSS, two recent purchases of ieDigital, are merging under a single brand.

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