Asian messaging services company Line Corp has outlined plans to expand its operations to include fintech-based services including payments.

The Tokyo-based company, which is owned by the South Korean internet search giant Naver Corporation, is best known in Japan for its popular messaging app.

Line began its so-called ‘second growth phase’ earlier this year, moving into fintech, including blockchain and artificial intelligence (AI) and investing JPY 20 billion (around US$182 million) into its mobile payments business Line Pay. This week it announced that a mobile payments alliance with the used goods online marketplace app Mercari.

The company’s plans were further outlined this week in a Financial Times interview with Line’s founder, Shin Jung-ho, who is being promoted to the role of co-chief executive from the beginning of April. He told the paper that Line is expanding into fintech and cashless payments to avoid becoming complacent or stagnant.

“My biggest priority is to ensure that the company is in a constant position to deliver innovation,” Shin said. “As cases in the US and Europe show, the fear is that we will become big and sluggish.”

Ready for the challenge

As the FT notes, Line’s messaging app is widely used in Japan, not  just for communicating but to play games, make payments, find jobs and purchase insurance.

Line has 164 million monthly active users across Japan, Taiwan, Thailand, and Indonesia. In the past year, in addition to announcing plans to invest in financial services and artificial intelligence (AI) it has formed partnerships with Nomura and Mizuho Financial Group.

According to the report, Line Pay is being leveraged to expand its fintech services in response to plans for doubling Japan’s rate of cashless payments. A year ago, Japan’s trade ministry unveiled its ‘cashless vision’ plans to raise the country’s ratio of cashless payments from 20% to 40% by 2025.

Line is assuring concerned investors that the fintech business will be profitable within three years. Last year, the company reported an annual loss of US$33.5 million, its first since it listed on the stock market in 2016.

“There are challenges to expanding into new areas like fintech and payments,” said Shin. “But if users want this and it is an area where we can contribute to improving their lives, we need to take on the challenge even if there are some risks.”

Shin told the FT that his biggest fear is that Line won’t be able to offer an innovative environment to lure the right talent. A major part of his expanded role is to foster a corporate culture that can survive changes in an industry where the company’s share is tiny compared to WhatsApp and WeChat, which both have more than one billion active users each month. 

His concern is not the lack of resources to hire exceptional people, but whether Line can offer the kind of innovative environment for the top talent it hires to continue taking on challenges.

Shin said that while Facebook is late to the fintech party, it poses a major threat. “Considering Facebook’s scale and the number of users, there’s no mistake that they are a formidable competitive threat,” he added. “But we have spent years trying to understand the needs of our user base, and I am convinced we can offer services that are even more satisfying to our users.”