Rakuten Could Combine Bank and FinTech Operations

Japanese conglomerate Rakuten is considering merging its financial operations into one unit.

The plan, announced Monday (April 1), would consolidate the company’s bank, insurance, securities, and card company and other Fintech businesses into one group.

“This decision is based on the belief that enhancing the collaboration across FinTech business, including prompt and flexible decision-making, along with the deepening of the collaboration including data integration and AI utilization, is crucial for providing innovative financial services and adding more value to customers,” the company said in its announcement.

“On the other hand, Rakuten Bank has been working to further expand the customer base, strengthen the revenue base, and capture growth in the FinTech domain, aiming to become a leading fintech company in the age of zero cash.”

The company said the reorganization is expected to take place in October.

Research by PYMNTS Intelligence has shown that consumers like the idea of combining banking and other financial services into one place, or more specifically, one app.

Close to 7 in 10 consumers in the U.S. and Australia said they would merge their digital retail and grocery shopping and bill tracking into a one-stop app, with convenience-focused consumers overwhelmingly saying they prefer to manage their banking, investment and various shopping activities via an everyday app.

“Consumers expect an everyday app to deliver sought-after convenience: 59% of U.S. consumers and 37% of their counterparts in Australia cite seamless payment integration as a top benefit of using an all-in-one app,” PYMNTS wrote last year. “In addition, significant shares of consumers in both markets view an everyday app as a potential solution to minimize their app-related security concerns.”

Meanwhile, PYMNTS recently examined the trend of collaborations between traditional banks and emerging digital players in a conversation with Dave Scola, CEO, U.S. at Form3.

While the continued shift to online channels in banking is “certainly here to stay,” he said, that doesn’t mean banking has moved entirely into the digital realm, as there are still interactions that customers want to have face to face with their banks — mainly for high-value transactions.

And those visits, Scola added, offer banks a chance to cross-sell other products and services.

“Banks are loath to give this up — and understandably so,” said Scola. “They will want to preserve this as much as they can, going forward.”