Well actually!
there is a leveling system after all!
it is earned by progressing through the main storyline, you cannot level up by going through side missions.
Once I finished at Blackcry and TOB My characterand hana later level up became level 3
once I finished the critical part of the storyline, Once I recruited Gouki He is already Level 4 upon recruitment, He posses best counter-offensive abilities.
Once you progress enough in the game you will surely be rewarded with a level up, once level up just like any other RPG games, it will grants you a significant amount of HP a boost of Damage, and ect.