Digital banking has changed considerably, thanks to the constant evolution in technology, to keep up with customer preferences. It is safe to say that digital banking apps have now reached maturity with remarkable investments made in unicorns such as Revolut, Nubank, and N26.
According to Kearney’s research, by 2023, neobanks in Europe could have up to 85 million customers – approximately 20% of its population over 14 years of age. Similar predictions have been made for regions such as the USA, Singapore, Australia, India, and Brazil. Recently, unicorns in Asia Pacific have been setting payment trends that have been interesting to see, especially within the super apps space.
Effects of the COVID-19 pandemic – new customers with old needs
When we look at the representation of digital banks worldwide, it is dominated by the North American and European banks, who seem to be the main trend-setters.
Furthermore, the payment industry is going through a phase of ‘new customers with old needs’, which includes customer niches that were previously disregarded due to a turbulent relationship with their traditional banks. Consequently, during the pandemic, many digital banks have targeted these niches, which include freelancers, immigrants, SMEs, elderly people, and minors. Several digital banks are looking to provide customised support to these groups.
Super apps – what are they, and why are they a must-have?
A super app is an amalgamation of apps possessing multiple capabilities into a single mobile application. They provide seamless integration with other apps and an enhanced user experience, as multiple apps are aware of customer information such as location, buying preferences, and other financial details.
In an era where mobile users have increased their screen time to 25%, it might be difficult to imagine how we have survived without super apps in the past. Digital banks are becoming ubiquitous as Millennials (followed by Generation Z) change the way they wish to bank. Moreover, apart from providing multiple capabilities on a single platform, a super app is a game-changer due to its ability to be customised to the user’s needs. Therefore, Open Banking and APIs that interconnect these applications and payment services are essential in building a super app.
Furthermore, super apps which consist of multiple mini apps have minimum click rates with a better conversion rate. They gather customer details that are stored and used continuously, facilitating the customer’s onboarding process. Besides, the multiple mini apps target different customer segments, minimising product launch failures. For instance, WeChat currently hosts one million-plus mini apps within one app. Its wide range of services includes messaging, e-wallet, ecommerce, delivery, courier services, public transportation, e-tickets, and car sharing.
Besides, due to multiple apps sharing a single platform, the cost of acquisition for new users is significantly lower. Data shared by users is also beneficial as multiple mini apps have access to valuable information, such as financial transactions and access to social media accounts.
How super apps can add value to your organisation
Furthermore, here are some examples of how a neobank can generate profits:
They can approach children, migrants, and SMEs. For instance, Revolut provides banking capabilities to children aged between 7 and 17, in which the accounts are handled and funded by their parents.
They become marketplaces, acting as a one-stop-shop platform that fulfils multiple customer needs (such as Alibaba and Amazon).
They support the underbanked, a segment of the population with little to no access to financial services, through capabilities such as biometric identification – Tymebank in South Africa, for instance.
They can use the SaaS method and outsource their core technical capabilities through banking technology experts, like Tonik in the Philippines.
The future is neobanks
Regarding the future neobanks, those will comprise a variety of significant features. Chatbots, for instance, will play an important role in providing conversational banking, becoming a transacting channel that could technically replace an entire banking app. Being able to connect to marketplaces, personal AI assistance, and a technology partner with BaaS/SaaS capabilities are all important aspects in building the perfect super app ecosystem.
Therefore, keeping in mind the latest developments around digital banks, BPC Banking Technologies and Radar Payments – in conjunction with Fincog – have developed a detailed guide on how to successfully build a digital bank. Download your free copy here.
About Oleg Patsianskiy
Oleg leads BPC’s digital banking practice where he works on designing what the future digital banks could be. Oleg contributed to the creation of successful neobanks in numerous markets from South Africa, Romania, to the Philippines. He is passionate about digitalisation and building solutions that help people eventually live in better societies.
About BPC Banking Technologies
Founded in 1996, BPC Banking Technologies delivers innovative and proven solutions which fit today’s consumer lifestyle when banking, shopping, or moving in both urban and rural areas, bridging real life to digital. With 300 customers across 90 countries, BPC collaborates with all ecosystem players ranging from tier one banks to neobanks, PSPs to large processors, ecommerce giants to startup merchants, government bodies to local hail riding companies.
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