Digital Transformation
Are Superapps the future of financial services?
November 23, 2020

Summary – Superapps are grabbing a growing share of our connected lives. Banks must take action in order to remain central to their customers.

Banks no longer compete just with banks. Thanks to open banking and to rapid developments in technology, they compete with a multitude of companies from different sectors intent on capturing a share of consumers’ and business’ money and the fees it can generate. Now the banks are faced with a new powerful competitor that has the potential to threaten their very relevance. Tech-first companies and their “Superapps”.

We live in a time where an ever-expanding number of different companies and apps seem to offer increasingly specific financial and payments services – current accounts, savings accounts, trading accounts, loans, cross-border transfers, payments, crypto trading, the list goes on, each offered by a distinct and specialised app. It seems impossible to think that an app could offer all of these and more, all in one. Let alone, add on messaging, social media, commerce, ride-sharing, restaurant booking, and much more…

But this is the direction of travel. And it is the reality today in Asia. The advent of the Superapp, that provides a multitude of connected services all in one place. 

What are Superapps?

China’s WeChat is the most widely used Superapp. Originally a messaging app, like WhatsApp or Messenger, WeChat evolved to offer payments, social media, commerce and a wide range of other connected services to its users, all through the one app on their phones. Ant Financial’s Alipay is another Chinese Superapp, that was originally a payments app spun out of China’s ecommerce powerhouse, Alibaba. In China today it is difficult to go about everyday life without using these Superapps. Buying train tickets, booking restaurants, paying for utilities and taxes are all now done through these apps.

In the West, the closest thing to an all-encompassing Superapp, for the moment, would be Facebook – with its soon to launch payment platform Calibra – with messaging, social media, commerce, peer-to-peer payments and various other connected services. 

Other apps vying for a piece of Superapp territory include ride-hailing app Grab in Singapore; as well as Go-Jek of Indonesia, also a ride-hailing app; messaging platform Zalo and e-wallet Momo, both of Vietnam; and digital payments platform Paytm and ride-hailing app Ola of India. All of which have expanded into varying offerings of financial, messaging, social and commerce services.

A handful of banks are now also aiming to transform their mobile banking apps into user-centric online communities that can evolve into offering a host of connected services. Most notably Tinkoff, a Russian neobank, that has been offering a growing range of social, commerce and lifestyle services through its app, that also provides banking and payments services. Revolut, a European neobank based in the UK, has also been seeking to expand the range of services it offers customers, adding insurance, travel, lifestyle and loyalty to its core banking and payments services. Others in Europe include Caixabank in Spain and KBC in Belgium. 

Superapps typically offer a range of connected services, with communications and payments at their centre.

These can include: 
– A range of online connected services, such as messaging, social media, navigation, commerce, marketplaces, ride-hailing, and personal and home services; 
– Banking and payments and other financial services, such as loans, savings, investment, trading, cryptocurrencies, sending and requesting money peer-to-peer; 
– Financial products beyond banking, such as insurance products for home, auto, health, ID theft;
– Lifestyle and travel benefits, like concierge service, lounge access, ticket booking, hotel and restaurant booking, loyalty programmes; and
– Government and administrative services, such as ID, registrations, taxes, paying fines, etc.

The key is that we are no longer talking about an app, but a platform with an ecosystem of offerings centred around lifestyle. Indeed some Superapps allow for development of app-in-apps by third parties, by providing an API.

Banks need to take note, and action

With this broadening array of services offered, Superapps are beginning to blur the lines between a consumer’s social life, retail life and financial services life, with big implications. They increasingly hold all the relationships with the consumer and, most importantly, the data these generate.

One of the major benefits of Superapps is the data generated from a broad range of interactions and how this data can provide insight into customer behaviours and how to develop products and services and better target customers. This in turn leads to customers’ increasing dependence on Superapps. And more data being generated.

Meanwhile the banks are losing the customer’s data, and the customer itself.

But data is a sensitive topic for many and the benefits derived from customer data will only go as far as the customer permits – or trusts the organisation wanting to access and use it. Banks are in the business of trust – ensuring that their customers’ money is safe, that their customers trust them with their money. This is banks’ competitive advantage over tech companies and the e-money services and neobanks that are threatening them now. And banks need to leverage this advantage.

The challenge for banks is how to create offerings that go beyond the core competencies of the bank to enhance the value offered to customers, without compromising trust – the one asset that the bank-customer relationship depends on.

Banks are well-placed to develop more and richer services to their customers – they already have a great amount of data and insight on the customer and they have their trust.
With a carefully planned expansion into valuable connected services, banks can satisfy an increasing share of their existing customers’ needs and capture an increasing share of their spending and of their data. Combining technology and design with third party integrations, a whole world of possibilities (and customers) can open up.

The future of banking is not a solution but a platform. An array of own and connected third-party services centred around the end-user, going well beyond banking and payments. Banks’ role is to ensure trust in the ecosystem.

Pri-Num is a leading provider of mobile-centric technology solutions to the banking sector. Our solutions and experience enable banks to rapidly deploy innovative services to engage customers and stay ahead of competitors.