By Björn Goss, CEO and Co-Founder of Stocard looks at how super apps are the future of banking and financial services and what it means for the industry and customers alike.
For a long time we knew the financial world was headed towards digital transformation but 2020 accelerated this at a quicker rate than expected. What we have seen so far is that existing models moved to digital, such as banking is now mobile first and not face to face in a branch anymore.
To date aside from moving to your mobile phone, the concept of banking hasn't changed until now. But that's all about the change: The future is now in the financial super app, a concept cutting its way from China – who is arguably years of the Western world in some aspects. A super app is essentially one app that hosts a whole menu of services that not only benefit the companies but also offer optimum convenience for the consumer.
How do super apps work?
We should look to Asia where popular messaging app WeChat quickly took the continent by storm in 2011. Quickly after launch the company realised its future lay in adding additional services. It changed the platform to make it accessible to developers who could build apps within its ecosystem.
The WeChat formula worked. Today it has a staggering one million plus services including booking doctors appointments, accessing loans and ordering food for its 1.1+ billion users.
This staggering growth proves the benefits of and appetite for the super app. It is a glimpse to the future that will also become a reality in the Western world where user behaviour and expectations have historically developed in a slightly different way.
The touch of success:
So how did they do it? The most important component to success of the super app is the frequent customer contact. In the case of WeChat, messaging is a use case that pulls people back into the app. This constant engagement helps:
- Create trust in the product and brand to show it works smoothly
- Get the user used to a unified experience where 'know their way around' with a few taps
- Provides a free marketing opportunity to show users additional services can be used.
Essentially if a service is just one click away within a frequently used app and you know about it, the more likely you are to use it.
Although in Asia one super app has worked, in the likes of Europe we see it being more several super apps that cover a domain i.e. finance.
How to make a financial app super?
As mentioned, the most important ingredient is a high-velocity use case that creates a lot of customer touch points. It is clear that for finance, the most frequent use case is payments. .
We are starting to make some progress in Europe accepting the reality that banks are losing customer access. They are starting to address this by experimenting with products that make them more relevant in their customer's everyday lives offering more services related to payments, shopping, cashback, etc.
At the same time, we are also seeing providers of payment methods trying to move to the customer forefront as they are facing a similar strategic issue as banks. They are currently living on retailers' checkout pages next to other payment methods and are dependent on the customer choosing them.
What is key for the company is to occupy the most frequent customer touchpoints, arguably payment and shopping, and identify what banking services will be the most in demand to then monetise these customer touchpoints.
Who will dominate the super apps in the future?
For payments, platform players such as Apple and Google come with an advantage as they have these built in already. However another use case of higher frequency is P2P payments. But this weakens the position of these OS platforms (Apple and Google) as you cannot send money to your friends if they have a different device.
Square might be another one to watch. They already have a strong P2P app, and are expanding to other financial services, including investments, and are uniquely positioned in the sense that they also own a large amount of POS putting them in a better position as they own a larger part of the value chain / merchant access in addition to customer access.
It will also be interesting to see what Facebook's next move will be. Despite lack of success its Diem/ Libra launch hints at their ambition in the financial services space. Facebook brings a huge network of connected users (Whatsapp, Messenger) giving them an edge over others.
In addition we may see Asian players such as WeChat and Alipay enter Europe before attempting to break the US.
I think the success will come from those in a position to really offer convenience and value. This is where key fintech players such as Stocard are in a good position to evolve to a super app. For us we have frequent touch points in the likes of our partner retailers such as Starbucks, IKEA etc. Having a huge network with loyalty cards means we are also able to provide sayings to users which is an attractive offer.
Of course banks still have their part to play. Fintech services from both Big tech companies and start-ups will still need capital for customers' financial products and will therefore work with providers to have services underwritten and white labelled. But for the customer the super app is working hard for them and making it easier for them too.
It will be interesting to see how the next few years will evolve but I am certain that super apps will be a huge part of our lives for many years to come.
Björn Goß is CEO and Co-founder of Stocard, Europe's leading mobile wallet. Stocard has 60 million users and it processes over 1.7 billion POS-transactions per year. Digital management of loyalty cards and mobile payment are just two of the functions of the Stocard app. Stocard was founded in Mannheim in 2012 by Björn Goß, David Handlos and Florian Barth and the company has more than 100 employees. In addition to its headquarters in Mannheim, Germany, Stocard is represented in Sydney, Milan, Rotterdam, Paris and London.