Voice of the Industry

Anatomy of a super app in APAC – factors shaping its evolution

Monday 21 September 2020 10:49 CET | Editor: Raluca Constantinescu | Voice of the industry

Joshua Chong, Analyst at Kapronasia, elaborates on the key factors that drive the popularity of super apps in APAC and shape their evolution

Alipay. WeChat. Grab. Gojek. These household names have become synonymous with the term ‘super app’ in APAC. Presenting a dizzying array of apps housed under one roof, super apps continue to make the headlines with game-changing strategic moves. As super apps in APAC expand across the region and extend their reach into seemingly unrelated services and sectors, the question on everyone’s mind is ‘What’s next for these super apps?’.

Factors driving the popularity of super apps in APAC

Understanding the factors driving the widespread popularity of super apps in APAC can give us a glimpse of what the future may hold. In general, there are five social, economic, and technological factors that have contributed to this development: 

  1. High mobile and smartphone penetration, with daily usage ingrained into consumer habits. Countries such as Indonesia, China and the Philippines have a high smartphone device ownership among internet users and a growing share of web traffic moving to mobile devices in recent years. The familiarity with mobile phones and the reliance on them have set the stage for more services to be delivered through this platform.

  2. Significant unbanked population with limited access to basic banking services. Outside of capital and tier 1 cities, customers find it hard to access basic services such as cash withdrawal, domestic money transfer, and bill payments. Their best option may often be the time-consuming and error-prone process of physically carrying cash to a bank outlet a few hours away in a neighbouring village.

  3. Numerous micro-small-medium enterprises (MSMEs) that increasingly want to accept digital payments or are forced to do it. For a business to accept payments on an app, all it takes is a two-step process of downloading the app and registering with basic information. Coupled with government initiatives such as demonetisation in India, it is easy to see why platforms like Paytm and BharatPe have experienced a rapid growth.

  4. Lower concern and consumer awareness about data privacy issues. Consumers in APAC and especially in emerging Southeast Asian nations tend to show little concern about how companies use their personal data. The promise of a juicy discount or cashback generally attracts many customers to provide their personal details, often without much consideration for data security and privacy measures.

  5. Presence of many areas with high population density and similar socio-economic standing. Group buying websites have utilised this trend to offer attractive ecommerce discounts and become a big hit in China and many Southeast Asian nations.

Evolving through mergers and partnerships

It is worthwhile to consider that super apps generally started off as single-service apps. These single-service apps rode on the waves of the key trends highlighted above and, upon reaching a critical mass, turned to mergers and partnerships.

Consolidations have played a key role in forming Chinese super apps, and they tend to be driven by competitive pressures. Didi, the Chinese transportation platform, was formed from a 2015 merger of Kuadi Dache and Didi Dache. Despite their dominance, the companies were tangled in price wars that saw them lowering fees and offering financial concessions to capture market share. Their coming together is likely what drove Uber to relinquish its position in China, and it placed Didi in a better position to weather future government regulation.

Not surprisingly, rumours about a possible Grab-Gojek merger started making their rounds on the internet in early 2020, as the two are currently burning cash while they compete to attract drivers and customers to their apps. Mergers are likely to be a trend in the near future, as platforms increasingly realise the benefits of combining their treasure troves of data to improve offerings and cross-sell services.

Meanwhile, strategic partnerships have enabled app platforms to expand their offerings beyond the core services. For instance, Gojek has partnered with major local production houses and international studios to launch a video streaming service, GoPlay, on its core ride-hailing platform. On the other hand, Ant Financial, the operator of Alipay, announced a partnership with Vanguard to bring investment advisory services to retail consumers in China. As this range of services continues to expand, users will increasingly find themselves attached to the app, as it will be intertwined with every facet of their lives.

What does the future hold for APAC super apps?

The APAC region consists of nations with vastly distinct cultures, economies, and commercial practices. Even leading players such as Gojek have found it challenging to gain traction outside of their home market, as it turned out that unique product adaptations and strategies were required to succeed in each neighbouring country. For this reason alone, it is unlikely that super apps will make bold product launches across the ocean. While the core services of super apps will likely remain in the region, the boldest ones will extend their reach behind the scenes by taking equity stakes and forming partnerships with foreign up-and-coming tech startups. The goal here would be to incorporate the startup’s technology and data into the super app’s native ecosystem.

This is especially applicable to players such as Tencent and Grab who have increased their focus on fintech with ambitions of developing a global digital banking ecosystem. Instead of ‘expansion’, the new buzzword for fintech-focused super apps could very well be ‘integration’.

This article was published in our Payments Methods Report 2020, an extensive overview of what’s new in how people pay in the most relevant ecommerce markets.

About Joshua Chong

Joshua is an analyst at Kapronasia and has experience across banking, payments, and capital markets. Before Kapronasia, Joshua was with Morgan Stanley Equity Research in London and held strategy and business development roles with UK-based fintechs in the payments and asset management industries. Joshua graduated from the London Business School with a Master of Science in Financial Analysis and holds a BBA degree from BI Norwegian Business School.


About Kapronasia

Kapronasia is a leading independent research and consulting company focused on the Asian financial services industry. We help financial institutions, technology vendors, consultancies, and private equity companies understand the impact of business, technology, and regulatory issues in banking, payments, insurance, and capital markets.


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Keywords: Kapronasia, Joshua Chong, Alipay, WeChat, Grab, Gojek, super app, Asia, APAC, mergers and partnerships, digital payments
Categories: Payments & Commerce | Online Payments
Countries: Asia
This article is part of category

Payments & Commerce