May 12, 2021

SoftBank Group announces annual net profit of US$45.8bn

Fintech
SoftBank
Banking
investment
2 min
SoftBank's record figure was driven by increased investments from the US listing of Coupang earlier this year

The Japanese technology giant SoftBank Group has released details of its recorded annual net profits, which hit $45.8bn.

The growth was driven by the recent Coupang IPO making SoftBank’s annual earnings the largest of any Japanese company ever. It has also propelled the group’s positioning making it the third most profitable company globally, topped only by Apple and Saudi Aramco.

SoftBank, which has also nearly completed its $22.9bn share buyback programme, has enjoyed a remarkable year despite its share prices falling by 3% on Wednesday prior to the annual net profit announcement.

In Q4 of 2020, it recorded $17.8bn in net profit - up from $13.23bn in the same period in 2019.

According to reports, Coupang’s offering of 120 million new shares priced at $27-30, resulted in the valuation of SoftBank Group surpassing the $50bn mark.

The company has also invested billions in its technology platform, B2C services and products and is the leading ecommerce enterprise in South Korea.

SoftBank investors

Reports suggest the recovery of Vision Fund was the result of the DoorDash (the US food delivery app) after it made an appearance on the US stock market. This, coupled with SoftBank’s investment in the Chinese proptech, Beike, offset the US$2.7bn in losses from SB Northstar - the Japanese conglomerate’s trading unit.

New investments for SoftBank

The news follows on from the recent announcement SoftBank has invested $730m in THG Plc - the beauty and lifestyle ecommerce company based in Manchester, UK.

Formerly known as The Hut Group, THG, which operates over 100 international websites selling fast-moving consumer goods direct to consumer through its proprietary ecommerce platform, already owns Lookfantastic, Illamasqua and Glossybox, as well as supplements firm Myprotein.

It will use the new capital to expand its operations and "execute an advanced pipeline of strategic M&A" as well as investing in its technology arm, THG Ingenuity.

Reports suggest that if SoftBank invests $1.6bn in THG Ingenuity, it would provide the group with a 19.9% interest in THG Ingenuity at a valuation of $6.3bn.

To put the figures into perspective, SoftBank’s fiscal year profit is double that of Toyota Motor Corp’s record, which was the previous highest figure achieved by any Japanese company.

Speaking about the group’s success, SoftBank’s founder, Masayoshi Son, who founded SoftBank in 1981, referred to the group’s 40-year history and told journalists, “We can finally count our revenue and profit.”

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Jun 17, 2021

Zafin: Banking is now in the era of the tech ecosystem

Zafin
Banking
Technology
Digital
3 min
FinTech Magazine holds a Q&A session with John Smith, EVP Ecosystem at Zafin, on the evolution of banking and its future as an aspect of tech ecosystems

The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?

John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.

Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:  

Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?

It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started. 

While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk. 

Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand. 

I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.  

When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic. 

Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?

I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.

Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.  

The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC. 

I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives. 

Q. Are there any other bank tech trends you'd like to discuss? 

Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement. 

Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.

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