Rakuten Group announced on Monday that it intends to combine its fintech companies into a single organization. The goal is to improve customer acquisition and cooperation in a variety of industries, including securities, insurance, online banking, and credit cards.
Rakuten Group Inc. announced on Monday that, in response to increasing losses in its mobile division, it intends to restructure its financial divisions by combining its credit card, insurance, banking, and brokerage businesses.
The Japanese online retail behemoth said in a statement that as part of its restructuring plan, Rakuten Bank Ltd., Rakuten Securities Holdings Inc., Rakuten Card Co., and Rakuten Insurance Holdings Co. will be combined into a single group by October. Among the departments that will be streamlined, the bank will take the lead.
According to statements from the companies, Rakuten Group and Rakuten Bank signed a memorandum of understanding regarding the reorganization, which is scheduled to go into effect in October.
They also mentioned that following the integration, Rakuten Bank would remain listed on the Tokyo exchange.
Since launching a mobile carrier in 2020, the parent company’s finances, which are centered on the e-commerce platform Rakuten Ichiba, have suffered, resulting in operating losses for 14 consecutive quarters.
Rakuten has sold off assets and issued debt and equity to raise money. One example of this is the listing of Rakuten Bank in April 2023.
Additionally, in July 2023, it submitted an application to list its securities arm; however, this was postponed until November of the same year, at which point Rakuten sold Mizuho Financial Group a 30% ownership in the business.
After the reorganization, Rakuten may decide not to proceed with its plans to list Rakuten Securities, the group stated.
The group company stated that improved cooperation amongst its fintech businesses is “crucial for providing innovative financial services and adding more value to customers,” particularly those about data integration and AI utilization.
Rakuten Group anticipates that its steadily expanding financial businesses will contribute to higher revenue.
To strengthen its financial position, the company announced that it is now thinking of scrapping its previous plans to flotation shares of Rakuten Securities, one of the largest online brokerages in Japan.
The group company announced that Rakuten Bank, which made its debut on the elite Prime Market of the Tokyo Stock Exchange in April of last year, will continue to be listed.
The restructuring takes place in the wake of the technology conglomerate’s dismal mobile business, which resulted in a 339.4 billion yen ($2.2 billion) net loss for the year that ended in December—the fifth consecutive year of losses.
Rakuten’s mobile operations have been unprofitable because of the significant costs associated with setting up base stations across the country. Rakuten entered the market around 2020, hoping to challenge established giants like NTT Docomo Inc.
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