 Bloomberg -- The days of aggressively buying Southeast Asian banks appear over for Japans biggest lender, which is now focusing on digital investment to reach new customers and streamline operations.Mitsubishi UFJ Financial Group Inc. is seeking to spend money on startups like Grab Holdings Inc. rather than purchase more brick-and-mortar financial institutions, Chief Executive Officer Hironori Kamezawa said. Were always looking for such opportunities to invest in tech firms, he said in an interview.The coronavirus outbreak has provided a fresh impetus for banks worldwide to digitize their operations, as social distancing deals a further blow to the viability of their branch networks. Kamezawa, who was chief digital transformation officer until becoming CEO in April, spearheaded MUFGs deal to invest 700 million in ride-hailing giant Grab earlier this year.The digital shift has already been one of the megatrends in society, but it has picked up pace in the wake of the pandemic, said Kamezawa, 58.MUFG wants to tap Singapore-based Grabs vast client base and expertise in artificial intelligence. The companies are working together on about a dozen potential business projects in Thailand, Indonesia, the Philippines and Vietnam, where MUFG has commercial banking units, Kamezawa said.Were planning to generate profit by teaming up our Southeast Asian banks with Grab, he said. For instance, we have a credit model and Grab has its data on customers behavior. Were trying to create new financial services by combining the two.Southeast Asia is already seeing huge growth in demand for digital financial services, with revenues projected to more than triple to at least 38 billion by 2025, a study by Bain Co., Google and Temasek Holdings Pte showed last year.Kamezawa said the bank plans to start either a scoring model-based lending program or AI laboratory with Grab in the fiscal year ending in March. Hes not perturbed by the pandemics impact on the startup, which recently said it will cut 360 jobs to reduce expenses during the downturn.The ride-hailing business is in a tough situation, Kamezawa said. But food delivery is seeing a sharp increase at the same time, so theyre doing fine.Still, Grab Singapores managing director, Yee Wee Tang, has said the growth in food delivery hasnt been enough to cover the drop in transport business.Kamezawas background isnt typical of an elite banker in Japan. A math expert who studied number theory at University of Tokyos graduate school, he made an impression earlier in his career by heading the banks launch of bond options trading.Digitalization is key to streamlining operations, especially in domestic retail banking, he said. While MUFG and others saw a surge in branch traffic despite a stay-at-home plea by the government in April, Kamezawa said the bank is now seeing a jump in the use of online banking services.His two predecessors, Kanetsugu Mike and Nobuyuki Hirano, were known for their overseas backgrounds. Under them, MUFG spent about 15 billion to acquire PT Bank Danamon Indonesia and Thailands Bank of Ayudhya and obtain stakes in Vietnams Vietinbank and Security Bank Corp. of the Philippines.Asked whether the acquisition of commercial banks in the region is over, Kamezawa said: I think so.We have succeeded in making up for declining domestic profit through our push overseas, he said, adding that the priority now is to control steadily rising costs. We will recalibrate our global strategy, review growth areas and allocate resources accordingly.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2020 Bloomberg L.P. 