KDDI and Daiwa Securities to Offer Smartphone-Based Asset Management

KDDI and Daiwa Securities to Offer Smartphone-Based Asset Management

Japanese operator KDDI, in a joint venture with Daiwa Securities Group, will offer smartphone-based asset management that targets the telecom operator’s young customer base, according to a report. The venture is expected to launch operations in the fiscal year 2018, pending approval from Japan’s Financial Services Agency and its Labor Ministry.

KDDI plans to use customer data to offer investing services for each client. Phone-based support will be provided for first-time investors, and KDDI also plans to incorporate a point-based reward system. The joint venture’s app will offer access to a range of investment options. Joint venture customers will also be able to sign up and manage portfolios via smartphone.

The joint venture will leverage a starting capital of JPY 2 billion (US $18.3 million), with KDDI holding a 66.6 percent stake and Daiwa owning the remaining stake. A KDDI executive in charge of finance operations will serve as president of the joint venture.

Tarifica’s Take

As we have written on numerous occasions, mobile operators in a variety of economies have been getting more and more involved in providing financial services. Chiefly this is in the nature of mobile money and mobile banking access. KDDI’s venture, however, seems to break some new ground in terms of going beyond basic banking into asset management.

The plan is bold and certainly raises questions as to whether an operator, even in partnership with a well-established financial firm, would be overreaching in trying to enter this new field. However, we feel that by targeting the offering in a focused manner, to the young customer base, KDDI is doing itself a favor and increasing its chances of success. The reason for this is that the youth market—already well established as a very fertile field for operators in general—is also distinguished by its relative financial inexperience and lack of access to institutions. On the other hand, youths are very well connected, financially and culturally-emotionally, to their mobile operators. Therefore, we can expect this demographic to be particularly receptive to asset management services offered via an operator with which they already have a relationship.

That youths are also particularly in need of asset management services is a bit less obvious. Since they have less experience than older adults in investment and in managing their money in general, it would seem that the need is there. On the other hand, they may not be aware of the need or believe that they need such services. The success of the joint venture will depend on KDDI’s ability to sell the product to its young customers. It will also depend on whether the operator’s leveraging of customer data in fact enables it to determine clients’ needs and pitch tailored services to them in an appropriate manner.