PayPay Securities, a SoftBank firm, seeks to double account numbers

PayPay Securities Corp. Aims for Growth Amid Financial Challenges

PayPay Securities Corp. is setting an ambitious goal to double its brokerage accounts to 2 million by the end of this fiscal year, driven by users of the group's cashless payment system. The Tokyo-based firm's chief executive officer highlights the convenience offered by integrating brokerage services with the popular PayPay app, which had about 60 million registered users as of October.

The convenient setup of allowing investors to conduct brokerage transactions directly on the PayPay app is a significant draw, according to CEO Kenji Bansho. To realize its target of turning a profit in the coming years, PayPay Securities must significantly boost both its user base and the volume of assets under management. The company has been operating at a loss since its inception in February 2021, recording a net loss of ¥4.6 billion ($29 million) for the fiscal year ending March 31, 2023.

Despite these challenges, the company's biggest shareholder, PayPay Corp., a subsidiary of SoftBank Corp. founded by Masayoshi Son, remains optimistic. The number of PayPay Securities accounts has already doubled over the past year, reaching approximately 1 million by March. The introduction of tax-exempt savings accounts, known as NISA, has particularly spurred retail investors in Japan to open new accounts.

However, PayPay Securities operates in a highly competitive marketplace. It ranks sixth among online brokerage firms as of March, following leading players like SBI Group, which includes SBI Securities Co. with 12.5 million accounts, and Rakuten Securities Inc. with 10.9 million. Traditional brokerage firms like Nomura Holdings Inc., Daiwa Securities Group Inc., and units of Japan’s largest banks also dominate the market.

Market Dynamics and Growth Potential

Analysts predict that PayPay Securities will likely surpass the 2 million account mark and continue to grow. Bloomberg Intelligence analyst Hideyasu Ban notes that while the company is expected to increase its user base significantly, achieving profitability will require time. The key challenge lies in the small average investment per customer, necessitating substantial efforts to increase this figure.

The company's strategy of leveraging the vast user base of PayPay's payment system to enhance its brokerage services is seen as a smart move in the crowded financial landscape. However, as the company continues to vie for market share, its path to profitability will be closely observed, especially given the stiff competition from established players.

Looking Ahead

For PayPay Securities, the road ahead involves not only expanding its account base but also enhancing investor engagement and assets managed per account. The company's innovative integration with a widely-used payment app offers a unique advantage, but translating this convenience into larger financial gains remains a formidable task. As the firm pushes towards its ambitious targets, its performance over the next few fiscal years will be a critical measure of its success in the competitive brokerage industry.