MUFG, a leading Japanese financial group, has been looking to tap Silicon Valley, the world’s foremost hub of innovation, for open innovation. While a household name in its home market of Japan, MUFG faces limited brand recognition and resources in the U.S. Despite these challenges, MUFG has been working to achieve results by overcoming differences in business customs and organizational culture between Japan and startups in the U.S. In this discussion, Jun Onishi (Head for Americas, Global Innovation Team, Digital Strategy Division, MUFG), Shunsuke Maeda (Head of Business Development, Global Innovation Team, Digital Strategy Division, MUFG) and Takashi “Taka” Sano (Chief Investment Officer, MUFG Innovation Partners (MUIP)), share insights into their initiatives and success stories.
The discussion session, moderated by Akinori Matsuda (Managing Director, Head of Business Development Department, Digital Strategy Division, MUFG), was held at the Fintech Summit (FIN/SUM). The speakers delved into the key factors for successful collaboration with startups, engagement with management teams, and prospects for open innovation. By exploring real-world examples of partnerships, the discussion uncovers essential insights for Japanese companies aiming to drive innovation overseas.
MUFG’s global innovation framework and efforts
As a global financial institution, MUFG has established a dedicated team in Silicon Valley to incorporate technological innovation and drive an organized approach to innovation. At the core of this effort are two key entities - the Global Innovation Team (GIT) and MUFG Innovation Partners (MUIP).
What the Global Innovation Team Does
Established in 2014 in Silicon Valley, the GIT operates with a lean team of six members. According to Jun, the GIT's efforts are built on four key pillars: research, validation & creation, partnership promotion, and ecosystem engagement.
The GIT’s initial primary role was trend analysis, but its focus has since shifted toward conducting proof-of-concept (PoC) trials and developing new services. Jun emphasized that the team has recently been particularly focused on embedding itself in the ecosystem. Given that Silicon Valley operates as a network-driven community and MUFG is still relatively unknown locally, each team member must make an impact within their area of expertise for MUFG to establish a strong presence.
One notable initiative is MUFG’s partnership with Stanford University, which grants access to the university’s extensive alumni network. Such efforts go beyond simple research and have the potential to create value deeply rooted in the local ecosystem.
Investment strategy of MUFG Innovation Partners
MUIP functions as MUFG’s corporate venture capital (CVC) arm. According to Taka, Chief Investment Officer of MUIP, the firm operates on a fund-based structure, maintaining financial discipline while making strategic investments.
“Collaboration is a fundamental premise, but even if a strategic partnership succeeds, it is meaningless if the startup fails. At a minimum, we consider the startup’s growth potential and exit opportunities when making an investment,” says Taka.
MUIP’s investment objectives can be broadly categorized into three key areas:
1. Business co-creation – Investing in startups that can collaborate with MUFG to develop new financial solutions.
2. Business transformation – Supporting digital transformation, AI adoption, and operational efficiency improvements.
3. R&D –MUIP serves as a gateway to the cutting-edge technologies emerging daily in Silicon Valley, allowing MUFG to access innovations particularly in the U.S. that it may not be able to develop in-house. This long-term approach enables MUFG to externalize research and development in key areas.
MUIP’s investment reach extends beyond technology hubs like the U.S. and Israel, covering a broad range of regions including Japan, Southeast Asia, and India, to capture emerging opportunities globally.
Creating synergies through collaboration
Although the GIT and MUIP are separate entities, they create synergy through close collaboration. They share information, with the GIT identifying promising startups in Silicon Valley and MUIP investing in and supporting these companies.
Shunsuke Maeda, Head of Business Development, at the GIT, explains, “The GIT excels in discovering startups and building relationships, but we, at the GIT, are not experts in investment. On the other hand, MUIP is an investment specialist. By leveraging each other’s strengths and cooperating, we achieve smooth collaboration.”
Despite being a large corporation prone to organizational silos, MUFG has fostered smooth cross-departmental collaboration in the innovation space, supported by its executive leadership. According to Shunsuke, “MUFG has become a highly agile organization in the digital domain.”
This organizational characteristic has proven to be a significant strength, particularly in promoting innovation in the digital field. Thanks to the leadership’s support, even if mid-level management adopts a conservative stance, advanced initiatives can be pushed forward from the top.
Success stories of Japan-U.S. collaboration
Through its open innovation efforts in Silicon Valley, MUFG has achieved strategic outcomes that go beyond just the introduction of new technologies. This section introduces success stories and outlook.
SINAI: Efforts toward achieving carbon neutrality
In 2021, when MUFG declared its commitment to carbon neutrality, the group required an efficient monitoring system for its greenhouse gas (GHG) emissions. The solution the GIT identified was SINAI, a company providing SaaS for GHG emissions measurement.
The project progressed rapidly for MUFG, as it successfully led to the launch of a service for MUFG in December 2021, merely six months after the project began. This rapid execution was made possible through careful communication with the startup, meticulous and quick coordination with relevant departments, and fast decision-making by the executive leadership.
This case has become an excellent example of overcoming the differences in business practices and time perceptions between Japan and the U.S. to establish a win-win relationship.
Abnormal Security: AI-powered business email fraud detection
Abnormal Security, a company leveraging AI to detect business email compromise (BEC) and phishing attacks, is another key example of MUFG’s open innovation success. With the rise in cyber threats targeting financial institutions, MUFG sought a solution to protect its operations and clients from increasingly sophisticated email fraud.
The collaboration with Abnormal Security led to the implementation of its AI-driven solution, which identifies and prevents fraudulent email attempts that could potentially compromise sensitive financial data. This solution uses advanced machine learning algorithms to detect anomalies in email communications, providing enhanced security that reduces risks.
By partnering with Abnormal Security, MUFG has not only strengthened its cybersecurity but also positioned itself as a leader in using cutting-edge technology to safeguard digital transactions.
Auxia: AI-powered marketing optimization
As an example of collaboration in the marketing field, Taka introduced Auxia, a startup that provides an AI-powered marketing platform. The company was founded by former Google executives and developed a platform that automates through the use of AI agents customer journeys, a process that was traditionally manual.
After conducting a successful proof-of-concept (PoC), the Auxia platform was fully implemented on MUFG’s asset management platform “Money Canvas”, leading to significant improvements in key metrics and more efficient optimization of customer experience (CX) operations. This collaboration has also served as a stepping stone for Auxia’s entry into the Japanese market. The company is now working toward opening a Japanese office.
By becoming Auxia’s first financial institution partner in Japan, MUFG has provided Auxia with new business opportunities in the Japanese market, while gaining early access to cutting-edge AI marketing technology. This collaboration has created a win-win relationship for both parties.
Challenges in Japan-U.S. collaboration and how to overcome them
Various barriers exist between Silicon Valley startups and large Japanese financial institutions that pose challenges to collaboration. The GIT has organized these barriers into three gaps that create challenges in collaborating with startups, and has been exploring solutions for each.
Understanding the Three Gaps
According to Shunsuke, the first gap is the difference in business practices between Japan and the U.S., which is particularly evident when it comes to content in contracts. The second is the difference in speed between large corporations and startups, especially in how resources and time constraints are recognized. The third gap is the misalignment in expectations for customization, where the Japanese demand for detailed customizations can clash with a startup’s focus on scalability.
These gaps are not merely cultural differences. They present substantial barriers to business execution, requiring strong effort to bridge differences.
Addressing the differences in business practices between Japan and the U.S.
In American business culture, there is a prevailing belief that everything written in the contract is paramount, whereas, in Japan, there is often an expectation for reading between the lines and flexible adjustments. This difference can cause significant friction during contract negotiations.
Shunsuke emphasizes the importance of face-to-face negotiations to address this issue. In one project, he described how his counterpart painstakingly went through each line of the contract and specifications. He then flew back to Japan for internal coordination, only to return to the U.S. to seek clarifications. This back-and-forth process was repeated multiple times.
Direct, face-to-face communication, instead of relying on online meetings or email exchanges, is key to overcoming differences in business practices and deepening mutual understanding.
Additionally, Taka points out that for startups aiming to enter the Japanese market, partnering with Japanese system integrators (SIers) or local partners can be an effective approach to lowering the barriers of language and culture.
Adjusting to the differences in speed
There is a significant difference in perception of time and speed between startups and large corporations. Startups are forced to make quick decisions within limited resources and time, while large corporations tend to follow a more cautious and deliberate process before making decisions.
To address this challenge, MUFG adopted the strategy of bringing its management closer to the action. By directly communicating MUFG’s executive team the project team on the ground is able to speed up decision-making and ensure proper progress management by setting clear milestones from the early stages of the project.
This approach resulted in significant speed in MUFG’s collaboration with SINAI. The entire process—from defining requirements, contracting, and development to launching—was completed in just six months, a timeline considered exceptional within MUFG. This example stands out as a notable achievement within the organization, demonstrating the effectiveness of aligning leadership and maintaining clear, rapid progress throughout the project.
A realistic approach to customization demands
Japanese companies often request detailed customizations in systems and services. In contrast, Silicon Valley startups prioritize scalability and prefer standardized solutions over customization.
To address this difference in expectations, MUFG makes effort to share its vision with the startup with which it seeks to collaborate. According to Shunsuke, MUFG encourages dialogue with each startup about how specific features could make its expansion easier in Japan, and makes effort to persuade the startup that customization would help its business strategy.
Taka pointed out that “startups generally do not aim to create custom solutions specifically for large corporations,” and emphasizes the importance of “gradually defining clear milestones during the process of mutually understanding each other.” This approach helps to achieve customization satisfactory to both sides.
Overcoming organizational barriers
Middle management in large companies tends to focus on stability and risk avoidance. While this is crucial for smooth daily operations, it can present obstacles when introducing new technologies. MUFG addresses this by promoting a mindset shift from “Why not do it?” to “How can we make it happen?”
In fast-evolving fields like AI, MUFG’s strategy involves helping the executive team understand the importance of testing and learning quickly. This allows the organization to be guided by top-down leadership, with a focus on accelerating response to emerging technologies. Jun shared this sense of urgency, saying, "AI solutions are developing at an accelerating rate. If we don’t act quickly, we risk losing competitiveness without even realizing it.” This shared sense of urgency helps lower organizational barriers.
Supporting startups entering Japan
When Silicon Valley startups expand into the Japanese market, significant challenges arise from differences in language, culture, and business practices. Taka positions MUFG as facilitating entry of innovations born in Silicon Valley to Japan.
For instance, MUIP has supported U.S.-based Teamshares (a business succession startup) and Reflexivity (a financial data AI company) in expanding into Japan. MUFG not only helps introduce technology and services in Japan but also collaborates with Japanese system integrators to provide tailored support to address specific challenges in the Japanese market.
From these experiences, MUFG’s team has identified “vision sharing” as the most crucial element of a successful Japan-U.S. collaboration. By understanding each other’s long-term goals and strategies and setting clear milestones, both sides can demonstrate their commitment through actions, which is key to success.
Expansion into Asia and becoming a software company
One of the next steps that MUFG is looking at is bringing Silicon Valley-born innovations into the Asian market. According to Akinori Matsuda, Managing Director, Head of Business Development Department, Digital Strategy Division, MUFG, “If phase 1 is about bringing innovations from the U.S. to Japan, then phase 2 involves expanding into regions where MUFG’s network is strong, such as Southeast Asia.”
Additionally, Jun has expressed a vision for MUFG to become a software company. He points out that leading financial institutions like JPMorgan Chase and BBVA have already positioned themselves as software companies, deploying their own software engineers to develop and deliver services. Jun believes MUFG should follow this path.
Shunsuke describes the goal of increasing MUFG’s visibility, especially in Silicon Valley. He says that Japanese companies have the strength of properly executing projects through completion, but many global startups are unaware of this. Therefore, improving the international presence of Japanese companies in the open innovation space is critical.
Cultivating a challenge-oriented culture: importing the Silicon Valley spirit
Taka highlights the importance of fostering a culture of taking on challenges, drawing inspiration from Silicon Valley. In Silicon Valley, people who have failed in startups are seen not as failures but as people who took risks. Taka underscores the importance of this mindset.
“In new business ventures or digital transformation, no one succeeds every time. It’s necessary to build a corporate culture where more and more challenging risks are taken, and repeating this process is normal. By doing so, we hope to spread the recognition that ‘MUFG is not afraid to take on challenges,’ and let this awareness spread throughout society,” Taka said.
While MUFG’s team has managed to build a good track record, Jun explains that the team’s ability to identify promising startups comes from focusing on priority areas identified by the GIT each member specializes in analyzing one of these areas and approaches startups and venture capitalists accordingly. When engaging with a startup, MUFG’s team focuses on how passionate the startup’s team is, whether they can empathy with our situation, and whether there is alignment of vision.
Following the policy of “bringing what domestic SIers in Japan cannot do from Silicon Valley," MUFG focuses on collaborative partnerships that aim to create new businesses together with startups, not just to introduce technology to MUFG.
Establishing a presence in Silicon Valley’s community
Silicon Valley is often described as a closed community where recognition is essential for survival. MUFG has gradually built its presence within this environment through consistent and persistent efforts. It was a tough journey initially, but MUFG now finds itself being invited to closed events and receiving opportunities to make its pitch.
This experience offers valuable lessons for Japanese companies seeking to engage in global innovation ecosystems. MUFG’s case shows that, beyond just technological and financial power, human relationships, expertise, and persistence are crucial elements in international innovation.
New possibilities for open innovation by Japanese companies
MUFG’s efforts in Silicon Valley highlight the potential for global open innovation by Japanese companies. From insights shared by Jun, Shunsuke, and Taka, it becomes clear that the key to success in startup collaborations is to keep making efforts with dedication and speed.
They emphasize that leadership commitment and quick decision-making are indispensable for the success of these collaborations. Additionally, building trust within the ecosystem, leveraging each team member’s expertise, and fostering a mindset that embraces challenges without fearing failure are all critical components.
Their vision of bridging Silicon Valley and Japan—bringing cutting-edge technologies and business models to Japan and Southeast Asia—represents the future of Japanese financial institutions. True global innovation emerges not just from technology adoption but from understanding different cultures and values and co-creating while taking risks.
