Can There Ever Be A One App To Rule Them All?

By October 1, 2019 February 2nd, 2021 Mobile, Tech

A new class of tech giants is arising from the East: Super apps – and they are already invading traditional financial services territory. Does your business have a successful strategy in a super app world?

If you live in the West, you may have heard of super apps. If you reside in Asia, you presumably spend most of your ‘screen time’ using one. So what are super apps, and why are they so innovative?

Super apps primarily serve as a single portal allowing users to connect to a broad range of virtual products and services. The most advanced super apps — like WeChat and Alipay in China —  give users access to online messaging (similar to WhatsApp), social media (similar to Facebook), marketplaces (like eBay), and services (like Uber). All through one app, one sign-in, one user experience. And this concept can be adapted to virtually any product or service a customer wants or requires.

Because of their versatility, super apps have swiftly become a part of users’ daily experiences. It is not out of the ordinary for a WeChat user in China to schedule a date with a friend via instant messaging, make dinner reservations, book some movie tickets, order a cab, and pay for every one of these transactions – all using just one app.

The hidden danger

While the emergence and increasing prevalence of super apps in the East doesn’t seem like it could pose any threats to the banking sector, the truth is super apps have the potential to endanger financial institutions. There are three reasons why fintech businesses should take close heed of the developments cropping up in the super app world.

They are disconnecting customers from their banks. 

Super apps like WeChat and Alipay provide a range of basic banking, savings, and investment products and services to their users. Although these products are still backed by traditional financial institutions, the fact that clients connect to these services through the super app, and not through the financial institutions directly, means that financial institutions are being driven one step further from their clients. 

This phenomenon is very similar to what happened in the insurance sector when platform plays and aggregators became popular. Soon, traditional financial institutions may realize they have been assigned to performing the controlled activities in the back office, while the super apps have taken hold of the customer experience and customer relationship.

They are using their vast wealth of data to deliver better services.

Not only do super apps have access to an exceptional volume of customer data, but they also comprehend how to use it to produce better customer experiences. They are utilizing their data to refine operational processes. For instance, super apps collect and use  social media and transactional data to risk-assess loan applicants. And that’s not all. They also employ data to make sure that they’re targeting the right clients, at the right time. Conservative banks, with siloed data and mainframe technology estates, are struggling to get as good a view of their consumers as their younger competitors.

They are building their brand reputations in financial services.

Providing payment services inside the app may seem pretty harmless at first because a marketplace without a payment mechanism is of no use from the start. At this point, the majority of these payments are running through traditional banking and card issuer infrastructure. Nevertheless, most of the prominent super apps now also have powerful connections with banking arms. WeChat has WePay for payments and WeBank for banking products and services. Alibaba has AliPay and Ant Financial. These banking apps are using the super app’s brand reputation and reach to access new consumers and strengthen trust in financial services.

Much ado about nothing?

It would be easy if super apps were a China phenomenon, but the reality is they are arising in almost every market around the world — and they are emerging from unexpected places.

Just as an example, in Southeast Asia, two super apps have emerged from leading ride-share platforms, Go-Jek, and Grab. Both apps presently come with a range of other services, from food delivery to medical advice, and both are now competing to assist consumers with finding and purchasing financial products. In markets like Indonesia (which is a pivotal battleground for the two emerging super apps), and where most people don’t have access to basic banking infrastructure, the super apps have come up with original new ways to reach potential customers. For instance, they’re now  employing their ride-share drivers to work as mobile bank tellers.

The West is also beginning to move in a similar direction, however, at a much slower pace. Mostly because the shift towards all-encompassing apps is being fueled by competition. Corporations in almost every industry that fear becoming disintermediated by a super app are thinking about new ways to become the West’s answer to WeChat and Alipay.

The development in consumer preferences is also encouraging the shift towards super apps in the West. As research seems to suggest, after almost a decade of separation and unbundling of services in their lives — consumers are beginning to return to rebundling.

Instead of signing in to multiple apps to order food, access ride-sharing services, and make payments, people would rather sign in to  just one app. Sure, consumers may not be asking super apps per se, but they unquestionably want the convenience and simplicity that super apps can provide.

Becoming the superhero

It might be challenging to attempt to compete against giants like WeChat and Alipay, but it is possible. It won’t be long before key players rise to take a fairly dominant position in other developing markets like Indonesia, the Philippines, and Malaysia. If your longer-term plans involve setting up a digital offering in these markets, you may want to start considering how to partner with the current market leaders.

In markets where a market-leading super app has yet to surface — there is still some time and opportunity for businesses to take the lead. One approach could be to leverage open banking architecture and application program interfaces (APIs) to build an ecosystem of diverse industry players within one single app. A quick scan across the marketplace suggests there are already several tech firms attempting to do just that.

The other option is for established leaders to unite their power to create a Western super app. Many complex combinations can be used to create a winning formula, and not all of them need banks to be in the lead.

Super steps towards super apps

What can businesses be doing to prepare for a world dominated by Super Apps and mobile services, especially financial ones? Previous experience suggests that regardless of the size and scope of the line of business, executives should be examining four key aspects to ensure success:

Partnerships and ecosystems

The emergence of super apps is just another indicator that the world of industry verticals is making way to a world driven by consumer experiences. In this environment, the value of a business will be ranked based on the quality of its ecosystem.

Open data and APIs

Much of the success of today’s super apps depends on the fact that they can share data across various service areas and lines of business in order to garner a better view of their customers. 

Businesses will need to examine their options and find out how they can use APIs and open data architecture to support the same kind of heavy data flow.

Data and analytics capabilities

Having great customer data, on the one hand, and interpreting that data, on the other, are two very different things. Enterprises will need to steer their investments into enhancing both their data management and their analytics capabilities if they wish to compete on a level playing field with existing super apps.

A vision for the future

Businesses will soon have to decide where they want to be in the future. Regardless of whether they intend to be a front-office player within a super app, a back-office enabler, or yet another part of the regulated infrastructure,  companies need to start investing and growing towards delivering that vision.

Bottom Line

Our view is that, at least for the next decade or so, consumers and businesses will be moving towards super apps. The big question is whether companies will manage to rethink the way they will deliver value in a world dominated by super apps and whether they can get moving before super apps become a super disruption. 

If you want to prepare for a future dominated by super apps, and you need an expertly crafted app design, we’re here to help.