The Rise of Soramitsu and the Digital Transformation of Banking in Asia
A Surprising Telegram Message and a Humble Start
Soramitsu’s journey began with an unexpected Telegram message in 2016 from an individual claiming to represent Cambodia’s central bank. At the time, Takemiya and Okada had recently founded Soramitsu, and the company operated on limited resources. This message led to the pivotal collaboration that would change the trajectory of the company.
In 2020, Soramitsu joined forces with Cambodia’s central bank to launch Bakong, a blockchain-based system that facilitates instant money transfers in U.S. dollars or riel. Today, Bakong boasts 8.5 million accounts and processed transactions worth $12.2 billion in 2022, making it a groundbreaking development in Cambodia’s financial landscape.
Soramitsu’s Rapid Expansion and Unique Position
The success of Bakong catapulted Soramitsu into a prominent position as a developer of digital payment systems throughout Southeast Asia. Currently, the company is conducting trials for a blockchain payments system for the central bank of Laos and is engaged in a project aimed at expanding an Asian cross-border payments system, collaborating with Mitsubishi UFJ Trust and Banking Corporation, among others.
Soramitsu is also exploring the possibility of digital currency programs for central banks in developing countries such as Vietnam and the Philippines. Despite its growing influence, Soramitsu remains relatively discreet in the banking sector, with many industry insiders being unfamiliar with the company’s details.
Capitalizing on Opportunities and Low Barriers
Soramitsu’s ascent can be attributed, in part, to the relatively low barriers to entry in the emerging blockchain space in Southeast Asia. With limited established competitors, clients have been open to partnering with a smaller and less proven vendor like Soramitsu, according to Zennon Kapron, director of Kapronasia, a Singapore-based fintech consultancy.
Balancing International Ventures and Self-Funding
Soramitsu, often referred to as a “boutique blockchain company,” now operates with approximately 150 employees worldwide, including in the U.S. and Russia. While it has secured grants from Japanese government agencies to support its projects, the company remains largely self-funded and profitable. In 2022, Soramitsu reported an annual revenue of around $20 million.
The American-Japanese Connection and Bakong’s Success
The co-founder of Soramitsu, Makoto Takemiya, originally hails from the U.S. and changed his name to Makoto Takemiya after relocating to Japan. His dedication to Japan is evident in his photo on the company’s website, where he is seen in traditional attire with kyudo arrows in the background.
The success of Bakong can be attributed, in part, to the forward-thinking approach of Cambodia’s central bank at the time, led by Chea Serey. Under her leadership, the bank embraced digital banking and chose to upgrade Cambodia’s interbank payment infrastructure using Soramitsu’s blockchain platform, Hyperledger Iroha.
Beyond Banking: The Future Challenges
Soramitsu’s journey hasn’t been without its challenges and controversies, including disputes with colleagues at previous fintech startups and ambitious proposals for digital currencies in Sri Lanka and Ukraine that did not materialize. The company’s ultimate test lies in its ability to scale its success from Cambodia to other countries in Asia, where the unique needs and preferences of each central bank will shape the trajectory of its projects.
As the digital currency landscape continues to evolve, Soramitsu’s role in building blockchain-based solutions for central banks and financial institutions across Asia remains a fascinating and dynamic journey worth watching. Success, it seems, will depend on the design choices made by these central banks as they navigate the complexities of a rapidly changing financial landscape.