Soft Space locks in Series B funding from Japan’s Sumitomo Mitsui Card company

By Digital News Asia April 23, 2018

Fintech player aims to accelerate mindset shift of Japanese to adoption of digital payments
Access to Japanese market via SMCC’s 25 mil credit cardholders, offer customised solutions

Ken Kubo, President of Sumitomo Mitsui Card Company (left) with Chang Chew Soon, Group CEO of Soft Space

SOFT Space Sdn Bhd, one of Asia’s leading fintech players, today announced the closing of an undisclosed Series B investment with Sumitomo Mitsui Card Company (SMCC) – a wholly-owned subsidiary of Sumitomo Mitsui Financial Group (SMFG), which is one of the largest financial groups in Japan.

The round comes after it raised US$5 million (RM19.5 million) in a Series A round in May 2017 from Japanese e-commerce company transcosmos inc.

SMCC’s investment in Soft Space will create growth opportunities within Japan and the Southeast Asian (SEA) region. This alliance allows Soft Space to gain privileged access to the Japanese market to, among others, deliver customisable payment system applications; provide cost-effective EMV smart card readers for SMFG and its affiliates; and collaborate with SMCC to explore the possibilities of using Soft Space’s white label solutions.

Soft Space also aims to use the funding to seek opportunities to diversify and boost its global reach into new markets.

SMCC is one of Japan’s leading credit card companies and is the one of the major issuers of VISA cards in the country, with over 25 million cardholders and US$110 billion (RM428.5 billion) in transaction volume in 2016.

By tapping into the vast database of SMCC customers, Soft Space will be able to customise financial solutions that meet Japan’s consumer needs thereby bolstering its expansion into the lucrative Japanese market.

“SMCC has been around for over 50 years and with this partnership in place, we will work together to build a more sustainable SMCC business model for the next 5 decades,” said Ken Kubo, President of Sumitomo Mitsui Card Company. “Moving forward, we will collaborate with Soft Space and create market-driven solutions that will boost both our businesses to new heights.”

In Japanese business culture, trust and relationships are of great importance as these values are paramount in building and upholding long-term business relationships. Conventionally, it is very difficult to penetrate the Japanese market due to its traditional nature. Japan is one of the most advanced industrial countries in the world with very little foreign acquisition. However, this policy has recently changed and Japan is experiencing more foreign investment.

SMCC has in the past invested in two US-based fintech companies – Square Inc and Stripe Inc. This makes its investment in Soft Space its first outside of Japan and the United States, with SoftSpace being the first Malaysian-based fintech company that SMCC has invested in Southeast Asia (SEA).

“To attain this distinction as the first company SMCC has invested in outside of Japan and the United States is a real privilege for us at Soft Space,” said Joel Tay, CEO of Soft Space. “We are humbled by this and will leverage this partnership to the fullest by delivering innovative fintech solutions to our Japanese partners to the best of our abilities.”

Japan is seen as a traditionally cash-centric society with 62% of consumer payments being made by cash in 2016 (Euromonitor International, 2016)1. But with the 2020 Tokyo Olympic Games coming up, which is expected to attract some 40 million foreign tourists all around the world, the Japanese government has been making continuous efforts to empower businesses to expand digital payment services within its shores.

With SMCC’s assistance, Soft Space will look to provide a comprehensive financial platform for businesses, and accelerate the shift in mindset of the Japanese population towards the adoption of digital payment solutions instead of cash.

“By aligning our synergistic strengths with SMCC and its affiliates, we will work together to provide innovative e-payment solutions that can transform their cash-centric payment lifestyle,” says Tay.

As one of the Malaysia Digital Economy Corporation’s (MDEC) key GAIN (Global Acceleration and Innovation Network) companies, MDEC COO, Ng Wan Peng noted that funding from SMCC is expected to boost Soft Space’s competitive edge and support its expansion into new markets. “Soft Space is one of Malaysia’s leading fintech companies and a strong partner of our initiatives. We foresee many potential growth opportunities stemming from their innovative solution and business model.”

Founded in 2012 by Chang Chew Soon, a DNA Digerati50 (2014-2015) Soft Space is a leading fintech player in SEA headquartered in Kuala Lumpur, Malaysia. Soft Space focuses on the development of innovative solutions for the banking and payment industry with over 20 financial institutions in 11 countries adopting its solution. It is now gravitating towards expanding into omnichannel payments that includes the adoption of artificial intelligence, QR code payments, E-wallet systems and money lending schemes.