Why is "Minna no Ginko" working on stablecoins? - The challenge of a digital bank that calls bank accounts "Web2 Wallet" [Interview with President Nagayoshi] | CoinDesk JAPAN

The "Minna no Ginko" (Everyone's Bank), which claims to be Japan's first digital bank, symbolizes the innovative stance and efforts of the largest regional financial group in Japan, the Fukuoka Financial Group (FFG). Recently, the full cloud-based banking system of Minna no Ginko was adopted for the core system of the digital bank being newly constructed by the Mitsubishi UFJ Financial Group (MUFG), which garnered attention.

FFG is based in Kyushu as its name suggests, but the users of the Digital Bank are spread across the country, primarily in the metropolitan area, with about 70% of the users being from the digital native generation.

〈Press Release〉Minna no Ginko announced on July 4th the launch of "Minna no Ginko 2.0" as part of its second founding phase. It has proposed the strengthening of its BaaS business and has initiated a "joint study towards the commercialization of stablecoin and Web3 Wallet" in collaboration with Solana Japan, Fireblocks, and TIS as one of its potential strategies.

I asked Kenichi Nagayoshi, the President and CEO, about the positioning of stablecoins and Web3 Wallets in "Minna no Ginkou 2.0" and future developments.

Bank Account is a "Web2 Wallet"

──When did the efforts for stablecoins and Web3 Wallets start?

Mr. Nagayoshi: The mission of "Minna no Ginkou" is to mediate all values. A bank is a "financial intermediary business", and finance refers to legal tender, which in Japan is the Japanese yen. If mediating the Japanese yen is the traditional banking business, I believe that in the future it will evolve into a platform that mediates not only the Japanese yen but also "valuable things".

Of course, at that time, there will also be assets that are not fiat currency but hold value and are widely deployed, like cryptocurrencies. From the launch, we envisioned such concepts as part of our mission.

The team responsible for Web3 and stablecoins was specifically formed in April 2024. Until then, it had been progressing as an organization-wide project.

── Is it correct to understand that Web3 Wallets and stablecoins will be offered in the future BaaS menu within "Everyone's Bank 2.0"?

Mr. Nagayoshi: It will depend on what kind of use cases will emerge in the future. How to smoothly connect the digital framework and the current real framework beyond the "wall" between the two. "Value intermediation" is our mission, so we want to work on that.

However, various assets cannot be connected unless they transform into "digital assets." With the increase in tokenized assets such as NFTs and security tokens (digital securities), there will be a growing need for hubs or payment methods like stablecoins to connect them, as well as Web3 wallets for holding and managing tokenized assets.

We position bank accounts as "Web2 Wallets," and we have finally entered a critical phase where it is extremely important to seamlessly provide both bank accounts, which are Web2 Wallets, and Web3 Wallets, and to design a smooth user experience.

Additionally, we believe that the deposit-backed stablecoin we envision is intrinsically linked to deposits, and that it can only be transferred via a wallet that has undergone KYC either by the institution itself or by its partner businesses. Furthermore, in case of emergencies, it is protected by deposit insurance, which provides a sense of security and safety for users.

Since President Trump took office, the movement of stablecoins has rapidly accelerated in the United States. It is noteworthy how far it will actually progress, what Amazon and Walmart are envisioning in terms of usage, and the possibility that credit card companies may no longer be able to maintain their fee-based business model in the future, which has led to their active interest in stablecoins.

──It is said that the bank account is a "Web2 Wallet", but I feel that the focus on Wallets is finally starting to take shape in the Web3/blockchain world.

Mr. Nagayoshi: I want to somehow improve the current usability issues of Web3 Wallets. Although it's still just an idea, I want to create a world where clicking a button on the home screen of the "Everyone's Bank" app instantly transforms it into a Web3 Wallet, and where regular savings can be easily converted into stablecoins through drag-and-drop.

The Tangible Feel of Regional Points Circulating 1 Billion Points

──How much of a timeline is anticipated for the joint examination of the stablecoin and Web3 Wallet announced today?

Mr. Nagayoshi: I would like to clarify the possibility of issuance in about six months. The proof of concept for the stablecoin has already been conducted on Japan Open Chain in 2023, and feasibility has been confirmed. This time, we will verify it in combination with Solana, Fireblocks, and TIS.

The Wallet was also released in April 2019 by iBank Marketing, a subsidiary of the Fukuoka Financial Group, based on Hyperledger Fabric, and began providing regional point services with the money app "Wallet+". In that sense, they have been working on blockchain for quite some time.

"Wallet+" currently has participation from 11 regional banks, and 1 billion points are already in circulation. For users, it doesn't matter whether the underlying system is based on blockchain, but we believe we have a grasp of the tactile feel of blockchain and what can be done with it.

──The reason for choosing Solana as the blockchain this time is.

Mr. Nagayoshi: The main reason is that when looking at global Layer 1 chains, it is being used in various places. The transaction speed is also quite fast, making it a chain that can be widely used in the payment sector. We are advancing our efforts in alliance with not only overseas partners but also domestic operators.

I believe that the issuance of stablecoins is likely possible. While issuance is feasible, the question is how to utilize it. In other words, I hope that they can leverage their global insights and relationships with domestic players for use case development.

The potential of stablecoins not present in current inter-account settlements

──In discussions about stablecoins, the question "What are the use cases?" always arises. While possibilities for cross-border payments and inter-company payments are mentioned, for example, inter-company payments may already be sufficiently smooth and low-cost in the current situation.

Mr. Nagayoshi: Considering the settlement costs, our A2A settlement with BaaS (a payment that directly connects the partner company's system with Minna no Ginko's system via API) allows for a payment service directly linked to the bank account, which effectively results in zero costs. In other words, when focusing on concepts like local currencies or settlement costs, it leads to the question "What is the role of stablecoin?"

However, on the other hand, when combining the unique advantages of stablecoins, such as being programmable and having a mechanism for smart contracts, it is believed that payment with conditional execution, which is currently not possible with inter-account settlements, can be realized. For example, an escrow payment where the payment is credited to the seller once the buyer receives the product.

As such use cases arise and needs emerge, it will be possible to provide stablecoins with an insurance system equivalent to deposits as one of the functions of a bank through transfers between KYC-verified Wallets. This will become one of the broader BaaS solutions.

It is believed that everyone's bank is developing C-focused business, but it will challenge B2B2B starting with the provision of BaaS. In other words, not only the circulation of stablecoins among individuals but also the potential for inter-company payments exists, and I am looking forward to seeing what kind of use cases will arise in this arrangement, including Solana.

We are challenging ourselves with what can be done with BaaS and even stablecoins, and timing is good as movements related to stablecoins are rapidly progressing in the United States, where we are closely watching for the emergence of unique use cases.