Japanese Challenger Bank Kyash Raises $41m from Jack Dorsey’s Block and Others
Kyash, a Tokyo-based challenger bank, announced Thursday that it had raised $41.2 million in a Series D funding round from investors, including payments company Block (formerly Square), Greyhound Capital, and Japan Post Investment Corporation, SMBC Nikko Securities, Altos Ventures, Goodwater Capital, StepStone Group, JAFCO Group, Mitsui Sumitomo Insurance Capital, and others.
The participation marked Block’s first investment in an Asia-based firm. Kyash said that it plans to use the latest funding to double the number of staff and expand its product growth. Shinichi Takatori, the founder and CEO of Kyash, disclosed how the company intends to use the financing.
Meanwhile, Takuma Baba, the Managing Director of Japan Post Investment Corporation, also revealed why they backed Kyash: “Challenger Bank is a core theme in fintech and unbundling of traditional banking has become an irreversible trend globally. We believe Kyash’s user-first and mobile-first philosophy and product architecture will allow it to evolve into a key platform upon rebuilding the financial services with technology.”
Expanding Business Globally
In March 2020, Kyash raised $45 million in Series C funding, despite the Covid-19 pandemic. The fintech firm raised the capital in order to expand its digital banking offerings.
Founded in 2015, Kyash has developed a proprietary full-stack banking infrastructure to offer mobile-first consumer-facing digital wallets in Japan. The platform provides personal remittance apps and online payment under the Kyash service name and issues virtual and physical pre-paid debit cards that can be used at Visa merchants.
Founded by Takatori, who in the past worked in the banking and consulting industry, Kyash provides a mobile banking app that enables customers to make online and offline payments, remittances, and ATM withdrawal services.
Since October 2019, Japan has been shifting to a cashless society when the government began partially subsidizing digital payments. However, the wake of the coronavirus pandemic has accelerated this movement. Global social distancing mandates have made cashless payments more of the norm instead of the exception. As a result, the pandemic has impacted the growth rates of international challenger banks. From January to May 2020, Kyash witnessed a growth of about 22%. Like Robinhood and Starling Bank, other competitors also experienced increased growth rates during the pandemic.
Kyash currently focuses on the Japanese retail market and may consider overseas expansion mid-to long term.
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