In the payment systems space, many major players are competing for consumers' attention by rethinking their core offerings to create something more consolidated. But what does this look like? Enter super apps.
Innovation breeds integration. And in the payment systems space, many major players are competing for consumers' attention by rethinking their core offerings to create something more consolidated. But what does this look like? Enter super apps.
What is a Super App?
This new finance feat is unlike any legacy bank, neobank, and payments app you've used in the past. Unlike regular applications, which are typically built for one specific function, these integrated platforms can do it all- that's the idea, anyway. The term was coined by Blackberry founder Mike Lazaridis in 2010, and he described the tech feat as applications that "once you start using them, you'll wonder just how you lived without them." In short, super apps collate numerous applications to provide a seamless consumer experience, aiming to serve as your one-stop shop for a wide range of digital products, services, and goods.
Even though conversations surrounding this technology began more than ten years ago, the idea hasn't been at the forefront of financial discussion in the United States- until now. Tech industry execs like Elon Musk, Jack Dorsey, and other higher-ups at Uber, Spotify, and PayPal have been keen on bringing this concept into American conversations for the past five years. But despite this influx of interest, there is not a superior super app dominating the American market.
In Asia, however, this approach to applications has taken the industry by storm and quickly became a large part of many Chinese consumers' lives. WeChat and Alipay have more than one billion active users that log in daily to split payments, order a cab, post a photo to social media, and more. These lifestyle super apps began as messaging platforms and soon expanded to host ecosystems that provide millions of additional services- but their goal was never to be a super app, as the former head of marketing at WeChat, Kevin Shimota, lamented. They became dominant after slowly adding features, beginning with payments and then expanding into something much more. From the outside, WeChat is much like our phone's app stores, but it differs in the way that it only presents applications when the user needs them. And with other semi-super apps and start-ups attempting to replicate their success around the globe, more and more Western executives are taking notice.
So, what is the allure of this type of platform? And how do they compete in the world of endless applications?
Why Super Apps are Succeeding
There happens to be a slew of reasons why companies would be interested in creating a super app, and most stem from one main goal: to capitalize on their established consumer relationships to dominate the market and expand their user base. Existing digital platforms with many users have a distinct advantage in this super app sprint; with the trust of consumers already won over, they provide the ability to leverage their market reputation to promote their own mini apps within their super app ecosystem. And while doing so, they can have a more comprehensive, end-to-end look at their consumers' data and browsing habits.
This vertical integration allows super app purveyors to offer their users a tailored, uniform consumer experience with diverse offerings, disintermediating proprietary providers from their customers. For example, Alipay offers basic finance channels through its platform that are backed by traditional financial institutions. So, while these legacy banks support super app spending, saving, and more, they are being further separated from the consumers' experience, removing their brand from the front-facing process entirely.
This points to why traditional banking institutions should be exploring this avenue if they are not already. Consumers are experiencing app fatigue and are looking for multipurpose platforms to help unify their digital presence, meaning there is a huge opportunity for banks to capitalize on this need.
KPMG recommends that banks leverage their open banking architectures and application program interfaces (APIs) to bring a group of market players together within one application. Additionally, other established industry incumbents could combine their influence to create a dominant super app in the US. But they'll need to do so before the likes of Meta, Paypal, and the self-proclaimed "only financial super app" Revolut dominate the market first. As Insider Intelligence reported: "First movers will have the best shot at drawing users deeper within their ecosystems, and the race has already started: Bank of America announced in February that it will combine its disparate mobile, private, prepaid, and other banking apps under a single application."
The Super App Stressors
With the fintech industry in general, we are already seeing disputes over the security, software, hardware, and intellectual property behind innovations in finance. But when you add super apps into the mix, complex conflicts are sure to arise as competition to become the "next great thing in tech" ensues. Litigation associated with the use of these apps has already been prevalent as it relates to alleged violations of free speech and privacy laws; consumers in Asian markets have little choice but to use these super apps, curbing their ability to shape how their data is used. And as these apps expand toward the US, this safety concern will only expand.
Many companies in the US are already taking strides to ensure their consumers' data is protected. As regulations on ad targeting and data distribution become tighter, many platforms are struggling to track users across the web, causing large drops in advertising revenue. Meta, for example, will lose $10 billion on account of Apple's App Tracking Transparency feature this year, and that number is only going to climb when Google deploys a similar technology in the near future. This struggle will only be further exacerbated by the presence of super apps and will likely cause complications in the realm of hackers, data breaches, and more as these applications will be some of the most data-rich on the market.
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