When mobility meets fintech: Interview with Toyota Financial Services’s Group CEO, Akihiro Fukutome, and SYNQA’s Group CEO, Jun Hasegawa
On 22th June 2020, we closed Series C round at $80M USD with SCB 10X, SPARX Group, Toyota Financial Services Corporation, Sumitomo Mitsui Banking Corporation (SMBC), and Aioi Nissay Dowa Insurance as investors.
Among the investors, we announced that we partnered with Toyota Financial Services Corporation. We interviewed Mr. Akihiro Fukutome, Group CEO of Toyota Financial Services Corporation, and Jun Hasegawa, Founder and Group CEO of SYNQA to discuss about the present state of fintech and mobility businesses, what the future looks like and the role of mobility and fintech companies, as they transform and evolve to create a truly open and connected society.
Questions for Akihiro Fukutome, Group CEO of Toyota Financial Services Corporation (TFS)
Q1: Toyota is the leading automotive company in the world. Since its inception, the company has expanded to other sectors and collaborated with numerous partners and companies in countless industries. Can you tell us a bit more about Toyota Financial Services Corporation? What are your core businesses and how does TFS work in relation to other entities within Toyota and with external partners like SYNQA?
Akihiro Fukutome: First of all, TFS is only a financial company. We’re in charge of all financial matters related to Toyota Group, but our role is evolving because of the changing vision of Toyota. Mr. Akio Toyoda, President of Toyota Motor Corporation, announced that Toyota will transform itself from an automobile company to a mobility company. That’s a big change for Toyota Motor Corporation. We need to take care of the whole car life cycle (value chain), from its sales until its end of life. Due to Toyota car’s durability, our cars’ value chain lasts longer for at least tenth to fifteen years, which is valuable for us. Hence, we need to enhance the value proposition out of the value chain. And this can be done with financial products to enhance Toyota’s business. That is our TFS’s mission.
Q2: We’ve just announced the investment and partnership between TFS and SYNQA. Can you help our audience understand what they can expect from the partnership this year?
AF: We are going into an unguided area. Although we are a conventional company, even in our industry, our competitors will be big tech companies. I believe we can see a trend where everybody is going into the same kind of business now. In order to stay ahead of the curve, we need speed and expertise. And we currently lack these two elements. We expect from SYNQA to give us speed and expertise to compete in the market.
Q3: The merging of finance and technology has injected greater dynamics and freedom to people and businesses. However, user experiences are far from seamless. Can you tell us more about the partnership between TFS and SYNQA and how it aims to improve customer experiences? What is the biggest pain point this partnership is tackling and how do they link to the current and future TFS product offerings.
Q4: Toyota Motor Company (TMC) and TFS established the Toyota Blockchain Lab, a virtual organization. SYNQA’s subsidiary, OMG Network is a fintech company that utilizes blockchain for their infrastructure and enterprise solutions. Do you anticipate collaborative efforts on the blockchain front and what would that look like?
AF: Of course. I expect a lot. I always demand my team to show me the actual use case of the technology. I believe I understand the concept of blockchain, not only in the financial industry, but also as a function of a ledger. I think there are opportunities in using blockchain technology for Toyota value and supply chain. I can see the two organizations working together to improve and share knowledge.
Q5: When we talk about mobility, we often think about the public sector. The reality of some Asian cities is traffic and poor public transportation infrastructure. How is TFS harnessing public-private partnerships, if at all, to propel mobility and fintech forward to offer freedom of movement to people?
AF: It’s important to mention that providing freedom of movement to people is our mission. In order to tackle mobility challenges, we’re primarily working with the private sector. Each country, city and even each village has its own set of challenges, which means we need to work with different levels of public institutions. We need to balance scalability and localization when working with public institutions. I believe this balance is key to achieving success to enhance mobility services.
Q6: Mobility and fintech seem to be on the minds of auto companies. What do you envision life will be like in 2030 and what is TFS doing now to contribute to that reality?
AF: It’s a good question that is difficult to answer. We can envision the future of auto companies for the next three to five years, but I believe nobody knows the answer yet for the next ten years. However, one of my ideas and expectations is the shift towards the commercial vehicle area. In the future, CASE cars (Connected cars, Autonomous/Automated driving, Shared and Electric) will be more expensive and perhaps, individuals cannot afford them, but companies can. So the future of TFS is perhaps to focus more on the commercial vehicles business.
Q7: What are the biggest challenges for tech and mobility providers and in your point of view, what are the not so obvious solutions that have yet to be applied?
AF: It’s hard to tell, but to overcome future challenges, we need to make more alliances with partners. Toyota cannot overcome the future challenges alone. We need to make friends.
Q8: Lastly, as an auto company transitioning to a mobility company, can you tell us about your digital transformation journey, SYNQA’s role in TFS’ journey, and any final words or insight on TFS’ experience with digital transformation?
AF: As you know, we are a traditional and conventional business, and we are not very good at digital transformation. One of our challenges is that we have to adapt to agile development. Not only in developing software and systems, but also in our culture. For example, to build a car, you need feedback from end users through the dealers. Once you get feedback, the development team can work to improve the car and solve issues that have been raised. However, the new car iteration will be available on the market in the next three to five years. That’s one production cycle. But, for example, when developing the Toyota wallet, we can get feedback from customers instantly and we can develop, adjust and update the software almost immediately. That’s an ideal cycle situation for our company.
I’d like to make our PDCA (Plan, Do, Check, Act) cycle quicker. We used to have a long PDCA cycle, but in the future, perhaps, we can divide the PDCA into smaller categories or groups. In short, TFS needs to become more agile, not only on the technology front, but also in our culture.
Questions for Jun Hasegawa, Founder and Group CEO of SYNQA
Q1: SYNQA has expanded its business scope over the years, from online payment to blockchain tech, and now to a broader offering of software that aims to enable digital transformation for companies. Can you tell us a bit more about the latest subsidiary?
Jun Hasegawa: Our new subsidiary enables big enterprises to adopt innovative technologies so they can become a tech company. Our core features such as tokenized loyalty points, digital assets, eWallets, and open APIs come from our subsidiaries’ expertise. In my experience, enterprises are eager to implement new technologies, but they lack knowledge or resources to carry them out within their existing systems. They need help and support. As a growing company, we want to accelerate the adoption of our infrastructures and the enterprises’ digital transformation process. Our new subsidiary fills these needs.
Q2: The world was caught off guard with coronavirus. How has that changed or influenced SYNQA’s business focus and subsidiaries’ solutions to customers?
JH: Luckily, SYNQA’s business and subsidiaries have been less affected by coronavirus compared to other industries because people still need payment services. However, the forms of payment have changed from cash to a digitized, cashless solution. But to become a cashless society, we need different solutions such as contactless payments, QR codes or online payments. There are different forms of payments and the opportunities are growing, especially in terms of mobile payments. In the past, mobile apps were used as an advertisement tool, as a way for companies to introduce their services. However, now, companies are trying to transform their apps into e-commerce applications or eWallet services with subscriptions. I believe that our businesses are more relevant than ever because we specialize in enabling payments in those types of channels.
Since the global pandemic caught off the world, we’re increasingly focusing on building partnerships with businesses that are on a subscription service model while continuing to build different payment solutions.
Q3: The merging of finance and technology has injected greater dynamics and freedom to people and businesses. However, user experiences are far from seamless. Can you tell us more about the partnership between TFS and SYNQA and how it aims to improve customer experiences? What is the biggest pain point this partnership is tackling and how do they link to the current product offerings of SYNQA subsidiaries?
JH: First of all, I’d like to say that I underestimated how big the Toyota ecosystem is. It’s impressive to see how Toyota has managed to grow their ecosystem and businesses over the years. It’s even more exciting to work with them because I believe this partnership will benefit the two parties and Toyota’s customers in many ways.
Although TFS is the global financial arm of Toyota Motor Group, I was surprised to see that on their balance sheet, they own the majority of the group’s assets. Asset wise, they are capable of exceeding the Apple ecosystem. However, they are not a platform yet because their infrastructure is fragmented. Our businesses specialize in financial infrastructure. We’re here to connect their dots so they can become a global mobility service provider platform. On our side, we’re not global yet, so this partnership also rapidly accelerates our expansion. I’m very excited to work with TFS.
Q4: SYNQA’s subsidiary, OMG Network, is a fintech company that utilizes blockchain for their infrastructure and enterprise solutions. Toyota Motor Company (TMC) and TFS established the Toyota Blockchain Lab, a virtual organization. Do you anticipate collaborative efforts on the blockchain front and what would that look like?
JH: Toyota Blockchain Lab is an experimental organization that tries to enable new secure infrastructures for Toyota Group. They worked on personal ID and supply chain management systems, but at the end of the day, they need a scalable and commercial use of blockchain. And this is something we’ve talked about; how can we enable real use cases of blockchain through the Toyota wallet.
As a group of companies, we have strong synergy in other business areas, not solely on the blockchain side. So we understand Toyota’s pain points, and that’s how we can help them. We know how to implement innovative blockchain solutions into their systems. Blockchain technology is open source, so everyone can access it. However, just because it’s open source doesn’t mean there’s necessarily educational support and help that go along with. OMG Network provides that kind of help with their developer documentation and business support. I believe that we can collaborate with Toyota Blockchain Lab on that front.
Q5: When we talk about mobility, we think about the public sector. The reality of many Asian cities is traffic and poor public transportation. How is SYNQA harnessing public-private partnerships, if at all, to propel fintech forward to offer freedom of movement and value transfer to people?
JH: In the past, the mobility sector was focused on hardware. The car was at the center of the ecosystem. Around a car, there are a lot of services such as insurance, maintenance and repair services, parking lots, etc.
That said, with the evolution of technology and sharing economy, the mobility sector is shifting towards technology, the person. How people own mobility is changing. For example, who determines that a car should be owned by one person? The sale side. But now, users have a choice to own a car with their friend, family, neighbor, or to not own any, but use a service that provides cars. Hence, the car manufacturers need to change their business model to be sustainable from a hardware centric model to a user centric approach.
For us, if people need to subscribe to a mobility provider service, again, they need payments and we’re here for that. So for now, we’re mostly working with the private sector, but it’s not impossible to work with the public sector in the future.
Q6: Mobility and fintech seem to be on the minds of many companies. What do you envision life will be like in 2030 and what is SYNQA doing now to contribute to that reality?
JH: In terms of how we use payments in the mobility industry, eventually, payments will need to interact by themselves similar to Amazon Go where people interact alone to buy their goods. In ten years, I believe that payments will be a more generalized network. Everything will be automated, connected and embedded.
Q7: What are the biggest challenges for tech and mobility providers and what are the not so obvious solutions that have yet to be applied?
JH: Although challenges have evolved over the past 50 to 60 years, all the legacy frameworks are still there. Despite our progress, it’s not easy to enhance or reframe them. I think to overcome these challenges, we need to understand the existing networks first.
Q8: Lastly, SYNQA’s group of companies offer traditional and innovative fintech products and solutions to traditional and non-traditional businesses as well as end-to-end digital transformation software. What is your advice to other companies that understand the value of evolving digitally, but have yet to take the full digital transformation leap?
JH: In my experience, companies want to digitally transform and access new digital tools and technologies, but sometimes, the processes to implement these new technologies are still very traditional. For example, in Japan, we still use a lot of paper. At some companies, you need to submit APIs to an excel sheet or spreadsheet. My advice would be that to successfully digitally transform, companies need to accept a completely new approach to build new stuff. They need to implement new processes and new ways of communicating.
So there’s the technical aspect of the digital transformation, but also the people aspect. That’s the only way an enterprise will successfully digitally transform.
The automotive and finance industries are rapidly changing in response to new market demands, and aptly so. The application of technology has not only strengthened partnerships between both industries, but is accelerating their progress – in this case, towards the shared vision of freedom of movement, whether it’s of people or any other form of value.
Hearing the thoughts of both leaders has been inspiring and SYNQA’s group of companies look forward to working with TFS to achieve our goals. . Thank you to Fukutome-san and Jun for sharing your vision!