Super app or super disruption?
Super app or super disruption?
A new breed of tech giant is emerging out of the East — Super apps — and they are already encroaching on traditional financial services territory. Do you have a strategy for success in a super app world?
If you reside in the West, you may have heard of super apps. If you live in Asia, you probably spend most of your ‘screen time’ using one. So what exactly are super apps and why are they so revolutionary?
Super apps essentially serve as a single portal to a wide range of virtual products and services. The most sophisticated — apps like WeChat and Alipay in China — bundle together online messaging (similar to WhatsApp), social media (similar to Facebook), marketplaces (like eBay) and services (like Uber). One app, one sign-in, one user experience — for virtually any product or service a customer may want or need.
Due in large part to their versatility, super apps have quickly become ingrained into users’ daily lives. It is not unusual for a WeChat user in China to set up a date with a friend via instant messaging, make dinner reservations, book movie tickets, order a taxi and pay for every transaction along the way, all using one single app.
The threat within
While the rise of super apps in the East may seem like a fairly peripheral trend to the banking sector, the reality is they have the potential to up-end it. There are three reasons why bankers should take heed of the developments very closely.
1. They are disintermediating banks from their customers.
Super apps like WeChat and Alipay offer a range of basic banking, savings and investment products to customers. While (for now) these products are being originated and underwritten by traditional financial institutions, this still means that these institutions are being moved one step further away from their customers. Much like what happened in the insurance sector with platform plays and aggregators, traditional financial institutions may quickly find they have been relegated to performing the regulated activities while the super apps retain the customer experience and relationship.
2. They are using their vast wealth of data to deliver better services.
It’s not just that super apps have access to an unprecedented amount of customer data, it’s that they know how to use it to deliver better customer experiences. They are using their data to improve operational processes — like using social media and transactional data to risk-assess loan applicants, and they are using their data to better target financial products to customers, at the exact time they need them. Traditional banks, with their siloed data and mainframe technology estates, are struggling to get as good a view of their customers.
3. They are building their brand reputations in financial services.
Offering payment services within the app may seem fairly innocuous at first; a marketplace without a payment mechanism may be doomed from the start. Currently, the vast majority of these payments are flowing through traditional banking and card issuer infrastructure. However, most of the bigger super apps now also have strong relationships with banking arms (WeChat has WePay for payments and WeBank for banking products; Alibaba has AliPay and Ant Financial) who are using the super app’s brand reputation and reach to access new customers and build trust in financial services.
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