Sumitomo Mitsui Financial Group (SMFG), Japan’s No. 2 bank, will ink an agreement with SBI Holdings to offer digital banking services on smartphones.

Both parties have taken the initial procedures towards a multimillion-dollar deal that is supposed to be signed later this week.

SMFG will acquire 20 percent of NeoMobile, a subsidiary of SBI, in June. Later this year, SBI will give the go ahead for SMFG to establish a $1 billion fund to invest in digital-technology firms. The fund will invest in fintech, cryptocurrency and 5G.

The parties are considering how to deepen their ties through mutual capital ownership.

The partnership comes at a time when digital technology firms seek to lure firms outside the finance industry into the sector, which further increases competition.

Under the agreement, the partners will complement each other. SMFG seeks to enhance its digital services, while SBI aims to add face-to-face consultations to its digital offerings.

It is worth mentioning that SMFG and SBI aim to accelerate their digital business plans through collaborative initiatives. The deal will include the development of a support business for regional financial institutions.

SBI has been boosting its partnerships with regional banks as it has joined hands with local banks such as Shimane Bank, Fukushima Bank and Chikuho Bank.

Strong relationships with Ripple

SBI has strong ties with Ripple as its CEO Yoshitaka Kitao is a member of Ripple’s board. In addition, he has strong friendship with Craig Wright who claims to be Satoshi Nakamoti. SBI also proposed paying dividends to shareholders in the form of XRP tokens.

In 2019, SBI Mining Chip, another subsidiary of SBI, has started manufacturing crypto mining.

Cryptolydian reported Mike McGlone, senior commodity strategist at Bloomberg, as saying that Ripple can cause disruption in the cross-border payment industry.

He added that Ripple could also challenge other major techs in the payment sector, but its exposure to the XRP cryptocurrency might serve as barriers.

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