Voice of the Industry

The rise of super apps: how banks can compete

Thursday 28 April 2022 09:31 CET | Editor: Claudia Pincovski | Voice of the industry

Super apps are becoming more and more popular across the world. Annmarie Mahabir, Principal Payments Consultant at Endava, explores what banks can do to compete in this new space of super apps

Super apps permeate almost every aspect of digital life in China, rapidly gaining traction across Southeast Asia, India, and South America, while also emerging in the West. But what is a super app? Simply put, it is one app that connects many applications under one ‘umbrella’ and provides a single interface to access a diverse range of products and services. It provides an ecosystem of third-party services fully integrated into the platform, facilitated by a payment system, this way offering a seamless user experience. The most popular example is China’s WeChat, which has grown from a simple messaging platform into a ‘lifestyle’ super app with over 1.2 billion users and an ecosystem of more than a million mini programmes.

Growth of super apps

Some other well-known super apps are AliPay (China), Gojek (Indonesia), Grab (Southeast Asia), Zalo (Vietnam), Paytm (India), and Mercado Libre (Latin America). These all started as single service apps with payments integration, but as customer demands grew, this opened the door for further development through the integration of a multitude of other services. Having a wallet feature within the app not only provides a seamless payment experience but it’s also critical for collecting accurate transaction data, which is invaluable in developing an appropriate growth strategy.

In the West, industry leaders such as Revolut, Klarna, PayPal, and Affirm have all entered the super app arena by bundling financial and other services to enable a ‘one stop shop’ experience for their customers. As competition heats up in the financial services sector, banks are facing a burning question: Is it time to pursue a super app strategy to protect their market share and keep their customers loyal?

How banks can compete in the super app arena

What are the key components of a super app? A large user base, social engagement, marketplace ecosystems, big data or, more accurately, smart data, payment integration, and the ability to satisfy the unique financial and lifestyle needs of the user – providing a convenient and seamless user experience. Banks are equipped with everything to compete, but it won’t be possible without reimagining their business models, embracing smart data, and investing in ecosystem development.

Here are four aspects banks should consider when preparing their super app strategy:

1. Strategy and Business Model: Determining the market entry strategy and business model is essential to succeed. They have a few options to choose from:

  • Developing their own super app – ideally starting with banking and financial services and adding non-financial services as part of their longer-term strategy.

  • Becoming a Banking-as-a-Service partner to super app ecosystems – providing the banking technology and/or the regulatory framework.

  • Going down the acquisition route.

Regardless of the chosen path, it’s imperative to decide and start planning now.

2. Open Banking and APIs: Open Banking provides a good opportunity for banks to take the lead on developing super apps by leveraging Open Banking frameworks and APIs to bring an ecosystem of diverse industry products and services together within a single app. Alternatively, banks can partner with super app platforms to provide payments and banking services via their powerful open APIs.

3. Data and Analytics: Investing in new technology to improve both data management and analytics capabilities is vital to compete. Using technologies such as predictive analytics, artificial intelligence, machine learning, and real-time metrics will facilitate hyper-personalisation of product and loyalty offerings. This way banks can give customers more control of their financial lives – smart budgeting and analytics tools that calculate personalised product offerings based on predicted spend behaviour, with real-time notifications will keep spending on track.

4. Marketplace Ecosystems: Super apps were born out of changing consumer demands for convenience, efficiency, and seamless experiences. To be attractive it’s necessary to create an ecosystem of third-party services fully integrated into the platform – numerous mini programmes providing multiple and diverse consumer experiences, all in one place. The ecosystem is what puts the 'super’ into super apps and the quality of the bank will be judged by the quality of its ecosystem, the APIs, and the seamlessness of the integrations.

Moving ahead...

To gain customer trust and drive brand loyalty, super apps must be convenient, engaging and intuitive, supercharged with personalised services and reward programmes. As the super app train chugs along with the high-speed rails in the distance, the race will be won by those banks that take advantage of Open Banking to harness smart data through intelligent analytics. This together with the right ecosystem and software development partner will enable banks to move ahead with their super app strategy.

Over the next decade, as Open Banking expands to Open Finance and Open Data, I expect super apps will also evolve into lifestyle apps in the West.

About Annmarie Mahabir

Annmarie is a payments leader with over 25 years of experience across payments, banking, and fintech. Passionate about payments innovation, she specialises in payments processing, solution delivery, and consultancy. With an MBA in business and a career in technology, she is a trusted advisor to clients, who appreciate her ‘big-picture’ view. Before joining Endava, Annmarie held senior technical and leadership roles at Visa and other global payment organisations, where she delivered innovative and pioneering payment solutions for clients across Europe, the USA, Asia Pacific, and the Middle East.

About Endava

Endava accelerates its clients’ ability to take advantage of new business models and market opportunities by ideating and delivering dynamic platforms and intelligent digital experiences that fuel the rapid, ongoing transformation of their businesses. By leveraging next-generation technologies, their agile, multi-disciplinary teams provide a combination of Product & Technology Strategies, Intelligent Experiences, and World Class Engineering to help its clients become more engaging, responsive, and efficient. Its Payments footprint covers the UK, Europe, and the US, focusing on helping clients build, integrate, and support next generation payment platforms to keep up with the fast pace nature and ever adapting digital world of payments.

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Keywords: super app, banks, payments , digitalisation, e-wallet, transactions , data, financial services, BaaS, regulation
Companies: Endava
Countries: World


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