Have No Fear: How Banks Can Capitalize on “Super-apps”
Apps have come a long way since the first iPhone was launched in 2007.
Back then, our screens were sparsely populated with funny little boxes containing games, weather forecasts and a very limited, pre-loaded iTunes library. Things have changed. Today, there are roughly two million apps available for download and 88% of time spent on mobile devices is spent using apps.
But head’s up: Now comes the rise of the super-app which, according to management consulting firm Accenture, is an app that has “a full ecosystem of services shaped around users’ everyday lifestyle needs, using one integrated interface or platform.”
What makes an app super?
The key difference between an app and a super-app is that a super-app has integrated payment options; you never have to exit the app to complete a transaction. Super-apps have multiple functions and services, allowing an all-in-one experience for users.
Super-apps are currently more prevalent in markets like Asia. For example China-based WeChat is one of the biggest stand-alone apps in the world, where 1.24 million users go to use social media, play games, complete bill payments, use ride-hailing services, book medical appointments and more. The closest example we have in the west is Uber, where you can not only hail a ride but order a cheeseburger for delivery, do your weekly grocery shopping and rent a car all from your Uber app. However, super-apps are gaining popularity over single-use apps and are something banks should be watching out for.
OK, but how does this affect banks? Don’t people still need to access their money?
Yes, consumers still need a place to house their money and a bank account or credit card to link to these apps. However, the open banking system used by super-apps poses the biggest threat to traditional banks.
Open banking creates an opportunity for more financial services to be completed within the super-app itself and allows the customer to check transactions and payments all within the app’s digital wallet, negating the need for their banking app. So, while super-apps might not be providing bank accounts for users just yet, they will be capitalizing a greater share of each user’s time and attention, which leaves less time and need for customers to use online services provided by their bank.
The opportunity for banks
If the threat of open banking is the glass half-empty, the opportunity for partnership between banks and super-apps is the glass half-full. Accenture outlines a handful of approaches for banks to take, the ripest for opportunity (in our opinion) being extending a bank’s reach by partnering with super-apps to embed financial services within the app. Banks already have the technology and the know-how, so app developers may be interested in partnering or white labeling to avoid building a payments option from scratch. But the time to act on this opportunity is now. From Accenture:
“Option 2 [extend] is the approach that many banks will likely consider. Some will offer white-label services in the background and quietly generate revenue from them. Others may continue to leverage their brand within the super-app’s ecosystem, using the platform to create a smoother and more convenient user experience. However, given the fact that the number of super-apps is limited, banks will need to act quickly or risk having no one left to partner with.”