Looking for apps in all the right places

I've been talking about and hashtagging one word for quite a while and starting today, I'm planning to write a lot more about it. But perhaps not in the same way that others are talking about it. More on that in future posts...but first...

There's a new buzzword sweeping through financial services.

We are an industry rich with buzzwords and financial terminology so it's no surprise that many of these words quickly become part of our everyday fintech language.

Words that start in the vocabulary of people deep inside the financial services universe.

Words that get simple and helpful explanations on great podcasts by great fintech leaders.

Words that get quoted in blog posts (too numerous to link) and books by all the best influencers.

Words that then get pulled from the fintech buzzword bingo card and dropped into conference fireside chats by banking execs.

These words, like 'APIs', ‘open banking’, ‘challenger banks’, ‘Banking-as-a-Service’, ‘embedded finance’, ‘blockchain’ and many more have all become part of our modern-day banking vernacular.

And now, this new word is so big in nature, that one word alone isn't enough. We have to use two words and sometimes, even shmoosh those two words together to make one longer word.

The "SUPER APP" is coming

Super apps have been mentioned everywhere the last six months.

Small fintechs are building them...

The CEO of tech giants are talking about them...

Already sky-high fintech valuations are being fueled by them. (No one could have missed this one...)

Yes, the super apps (or #SuperApps) are coming!!

The super app is here

Wait, what. I just said they were coming. Are they really here already?

Well, yes.

And no.

You may not have heard much about super apps, but you just need to look in the right places to find them.

But before we get to that...

What are super apps?

It's widely accepted that they were first described by Blackberry founder, Mike Lazaridis in 2010, as...

"...a closed ecosystem of many apps that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience."

As we know, Blackberry didn't go on to produce any super apps––they went on their own journey over the next decade––but the Blackberry founder's description holds strong for the super apps that have risen over the last several years, and it's Asia, and in particular China, where we need to look for the earliest and best examples.

Tencent's WeChat super app with over 1.24 billion monthly active users in China, and the AliPay super app with more than 1.3 billion global users, have bth dominated the market in China and spread out across Asia and globally.

Each company developed a single portal with a set of integrated services inside one app. We're not just talking financial services grouped together here. These super apps provide access to travel services, entertainment, health, lifestyle, news, tools and games––even a home to China's vaccine passports––all in one place. Booking a doctor's appointment, seeing what's on at the cinema, ordering a meal, or paying a bill can all be done within their super apps.

Apps within an app, powered by payments

I first used WeChat in 2017 on a business trip to China. I was already familiar with the super app concept but had not grasped the enormity of the ecosystems. It was only once I saw my colleagues constantly in the app, and realised that without it––and incidentally without them––I could not pay for something as simple as my coffee.

In a country that became a digital cashless society at such a rapid rate, WeChat and AliPay (with their QR codes and embedded payment functionality) enabled China to entirely skip the contactless card phase we have seen prevail in Europe so far (and which the US is forever on the cusp of).

The Ant Group and Tencent, creators of AliPay and WeChat respectively, both want to be the fintech platform of choice. Payments have always been at the core of their super apps, and key to their success has been that they become the user's digital wallet of choice, not only offline and face-to-face in stores, but online commerce within the app too.

In 2017, WeChat introduced the concept of mini-programs––small lightweight apps that run inside WeChat. Apps within an app. There are now over 3 million mini programs, created by both large big name brands as well as many small developers, all fueling the WeChat ecosystem.

Last year, $250 billion of transactions passed through these mini-programs. They keep hundreds of millions of users engaged on a daily basis inside one single app.

In Europe and the US, it's really only the social platforms––Facebook, Instagram, Twitter, WhatsApp, and perhaps a few others––that have a high daily active user count, but compared to these super apps, their services feel so limited.

As new players aim to build their own lifestyle super apps, trying to keep the customer's attention in their apps as much as possible, super apps must also battle it out to be the primary user interface (UI) for the customer. Does that mean that we can't have multiple super app winners in that battle? Maybe not. But at the moment it seems that consumers still like to have a choice.

Super apps in unexpected places

There are likely to be some dominant players building super apps and we're starting to see that these could come from unexpected providers.

Low-cost airline, Air Asia recently bought Gojek's ride-hailing and payments operations in Thailand, stepping up their ambition to be a super app. Gojek itself is a US$10 billion super app giant in Southeast Asia, which started as a ride-hailing app and now does food and grocery deliveries, cargo, payments and more.

So, super apps are well and truly here (albeit mainly in Asia, right now).

But does this all give us a glimpse into the future of super apps in the western world? Will it be the financial services providers leading the way or some one out of left field?

There are several big-name tech players like Google who already have the tools and services to build a super app, as I described last year in this post below.

Even Walmart in the US has been talking about their own super app as this excellent article from Karen Webster, CEO of Pymnts.com explains.

So.. could a European low cost airline really start a super app? Can you imagine RyanAir or EasyJet, even British Airways, building out a super app as Air Asia are doing?

Could multinational retail corporations with discount department stores and grocery stores, like Walmart, build a super app that consumers flock to online?

It may sound far-fetched right now, but looking back at Gojek's meteoric path from launching ride-hailing in 2015, to offer all these other services––including financial services––is reminiscent of Uber, another ride-hailing behemoth, and their stated desire to be a western super app.

But, there may still be some big roadblocks to super apps in the west.

Consumer behaviour is certainly different. Are we ready to put all our financial services and lifestyle apps in one place, with a big tech company?

As Dave Wallace, founder and CEO of creative & technology consultancy, NMD+ said in response to my LinkedIn post above...

"Culturally I think people in the west do still compartmentalise, and also I think there is an underlying mistrust of big-tech (big-anything), but simplicity and easy may well override these factors."

Some barriers may even be more fundamental and out of the consumer's control. Apple's current restrictions in the App Store make it difficult for anyone to create apps and distribute them outside of the App Store, or within other apps. Apple has built a reputation of trust and privacy and argues that the App Store maintains quality control and allowing third-party app stores on iOS would create security and privacy problems.

But super apps thrive on an open ecosystem of development, so this continued stance could slow the creation and evolution of super apps, at least on iOS. The current ongoing lawsuits between Apple and games maker Fortnite could very well determine the future growth trajectory of super apps.

The Super App of Financial Services

In the fintech community, we've been talking about super apps for several years. We saw the proliferation of super apps in the east early because finance was embedded in WeChat and commerce is a key ingredient to super apps. But the commentary around western super apps has nearly always focused on aggregating financial services.

After fintech did so much unbundling over the last decade, we are definitely seeing some rebundling of financial services, which could be the start of a journey to super app status.

The growing trend of collaboration and partnership between banks and fintechs, even now between fintechs and fintechs is an encouraging sign. I have seen it myself, working on both sides of the fence––in the past for the global banks and now as CPO at untied. Over the years, the conversations, maturity and speed of collaboration and partnerships have got quicker, more transparent and better in so many ways.

There is still a long way to go too.

Beyond the ooohs and aaahs of a potential 'super app' in financial services, what tends to often be under the hood is (so far) only banking and fintech services.

An aggregation of banking products.

A marketplace of financial services.

Perhaps, at best, an ecosystem of third-party products within an app. Maybe even inside an incumbent bank's app.

Too much hype misses the mark entirely on what a super app actually is and what the potential could be.

Bringing together financial products in a vertically integrated platform, creating an aggregator or a marketplace of products does not a true super app make.

A super app needs to go beyond financial services and offer more lifestyle services embedded into the daily life of the consumer.

Are banks ready to offer more lifestyle services? Are they ready to take on not only the tech giants, but retailers and airlines, and who knows who else offering their own financial services and more in the super app battle that lies ahead?

To see how banks might do this, again we need to look to the east.

Going Beyond Banking

CB Insights highlighted this week in their State of Fintech Q2 2021 report that Southeast Asia's super apps are continuing to grow their share of the user's wallets and expanding their product sets.?

As well a whole suite of financial services, Grab, GoJek and Payma––the three Southeast Asian companies highlighted by CB Insights––also list ride-hailing, food, grocery and package delivery, hotel and flight booking, gift cards and rewards, enterprise services, business and expense management, moving services, healthcare, shopping, entertainment, game purchasing, ticket purchasing and music streaming.

The data flow and connectivity between a combination of services in a single super app ecosystem is powerful for whole societies too.

As my fintech friends, Theodora Lau and Bradley Leimer wrote earlier this month...

"...a hyper-connected ecosystem...such business models empower those who were not previously included in the formal financial services industry as evidenced by Grab’s success story: An estimated 1.7 million microentrepreneurs open their first bank account with Grab since 2012, and 1 in 70 people in Southeast Asia has earned income through the Grab platform".

One interesting example that I have been following closely is TNEX––Vietnam's first digital-only bank. Officially launched in December 2020, it has made huge leaps forward in just eight months with a super app strategy and an opportunity to serve the country's 58 million un/underbanked citizens.

TNEX are removing the need for multiple apps, recently adding a chat function with more lifestyle features on the way for both consumers and merchants. They're already winning awards and I'm sure I'm going to write a lot more about them. Definitely one to watch.

Will super apps go global?

In the west, the super app revolution is still coming, but maybe not as we might expect.

One example that already outlined their plans to be a financial super app is Revolut. The same Revolut that last week announced an $800m investment at a $33 billion valuation...this week launched their first non-financial services product inside their app–a travel booking feature that lets users book accommodation.

Revolut's move into a realm dominated by the likes of Expedia, Booking.com, even Airbnb, may seem bizarre to many for a financial services app. But it makes sense as part of a super app strategy and echoes back to their roots in financial services too.

Revolut started as a travel money card because it's founder, Nik Storonsky was "wasting hundreds of pounds on foreign transaction fees and exchange rate commissions which just didn’t feel right". Since then it has built up a user base of 16 million users across more than 35 countries––although not without its own share of internal and external controversy. A move into a completely different industry vertical for a fintech, one that doesn't yet have a UK banking license, is a sign however that Revolut understands the concept of the super app and is beginning to execute on it.

We're looking at super apps all wrong.

If you want to look in all the right places for super apps, it's pretty clear that you need to look to the east for the best examples and the lessons learned.

But in the west, the revolution is at the starting line.

The super apps are coming.

BUT

...spoiler alert...

While we may be looking in the right places as to where super apps are coming from... we are looking in all the wrong places when it comes to what super apps should be, who needs them, and which companies will build them.

I believe we may be missing a real opportunity to create something special for a set of users who have been underserved by their banks, who have a totally different set of jobs to be done, who would really benefit from a one-stop shop of services to support them, and who may be willing to pay for such a solution.

The SME super apps are coming.

They're being built in plain sight by some big players in the space.

And that's what I'm really excited to write about next time...