Super App: Marketplace Model for FinTech
Updated: Oct 19
Super Apps have become ubiquitous in China and are taking root more broadly in Asia and Latin. But they are still in their infancy in the West and there is much debate about whether Super Apps are set to take off and achieve the same success and huge user bases as they have in these other regions.
In China, market-leading wallet apps, WeChat, Alibaba and Alipay have become firmly entrenched in consumers’ daily lives, be it booking a medical appointment, conducting financial transactions, messaging friends and family, ordering food or rides, or buying tickets and many other services. Go-Jek in South East Asia and Rappi in Latin America are similarly structured and have experienced similar growth trajectories.
The popularity of these Super Apps stems from several factors are that not prevalent in the West, namely the mobile- rather than desktop-first culture in China, government support for these apps, which have served to become platforms for a myriad of public sector services, and the inexorable shift towards cashless economies.
Super Apps have also benefited from particular emerging market conditions, namely huge un- or underbanked populations who would have no access to the financial system. FinTech disruptors are changing this, taking advantage of the high levels of mobile penetration even in lower-income segments of the population. Low fees, seamless access to basic services, particularly payment services, and user-friendly interfaces add to their appeal.
But what are Super Apps and why are they so popular in the East and other emerging markets? Super Apps are, in essence, an operating system within an operating system, consolidating a variety of different apps providing different services into a single Super App that gives users access to a useful range of services just one tap away from the home screen.
Mark Brady, director of Design Research at Sutherlandlabs describes it well:
“You might think of Super Apps as the Russian doll of the homescreen app; one interface with layers of different services built into a single location on your homescreen.”
Instead of downloading a host of disparate apps onto the home screen, which has different login and payment detail requirements, users only have to upload their personal and credit card or bank details once and then can book, pay and use the myriad of services offered on the Super App’s platform seamlessly and instantaneously.
The evolution of Super Apps in the East and Latin America is distinctive in that it started with an app that met a certain need – messaging (WeChat), digital payments (Alipay), online shopping (Alibaba), food delivery (Rappi) and ride-hailing (Go-Jek) – and then expanded to offer a range of services that meet their users’ other daily needs. Below is an illustration of the services now available on Go-Jek, including booking massages, booking cleaning services and getting medicine online.
Transition to the West
Excitement about the growth potential Super Apps offer in the West has been gaining momentum but for now there is still lingering scepticism about whether they will be able to mirror the success of their emerging market counterparts, given the different market and regulatory dynamics. Industry analysts point out that many of the companies who have expressed the desire to create Super Apps are FinTechs that have gone to market with financial services offerings, in contrast to the Chinese Super Apps, which added financial services as an extension to their initial product or service offering that distinguished them from the competition.
However, there are a few examples of companies in the West branching out from their original propositions into financial services and beyond. For instance, Uber changed the taxi industry with its ride-hailing service and now offers micro-mobility options, like scooter rentals, as well as food delivery and mobility ticketing. In late 2019, it entered the payment space when it launched Uber Money and it has since added its Uber Wallet.
Mark Zuckerberg’s Meta ambitions to leverage his social media (Facebook and Instagram) and messaging (Whatsapp) platforms by launching its financial services offering have hit regulatory hurdles and its grand plans for a multi-faceted ecosystem akin to a Super App are struggling to take off.
To build a Super App like WeChat or AliPay and still offer something not yet available in each of the niche markets through unique micro-services, companies in the West are coming to recognize they can’t go it alone and will be much better off if they partner with third-party providers who are experts in their niche. Revolut and Chime are going in this direction.
Meanwhile, Apple is also spreading its wings by entering the payment space with a new service that allows small businesses to accept payments directly on their iPhones without any extra hardware, competing for head-on with Block (formerly Square). There are other examples of digital players branching out into the finance space, like Shopify, Google and Strip.
A Super App is not just an app
Super apps are often considered as a single application that combines a variety of services and products, like their food deliveries, ticket sales and online shopping, all of which are not considered direct competitors to the banks or other financial services players.
However, the core concept of a super app is that it offers customers a one-stop-shop and marketplace in the form of an ecosystem of integrated services, including financial services, which complete the ecosystem. Ultimately, the evolving digital services industry will offer customers access to multiple applications and channels (Amazon) or no application at all (an API interface).
While the growth track of Super Apps in the West may differ from those in the East, tech disruptors will ultimately establish innovative business models designed to suit the specific market conditions in developed countries.
So what can banks do to prepare for a world dominated by Super Apps and mobile financial services? Our experience suggests that — almost regardless of the size and scope of the line of business — bank executives should be considering factoring in four key aspects to ensure their future success:
Partnerships and ecosystems. The rise of super apps is yet one more indicator that the world of industry verticals is giving way to a world driven by consumer experiences. In this environment, the value of a bank will be measured by the value of its ecosystem as much as the value of its balance sheet.
Open data and APIs. Much of the success of today’s super apps is predicated on the fact that they can share data across various service areas and lines of business to develop a better view of their customers. Banks will need to consider how they can use APIs and open data architecture (something my colleagues discussed in a previous article) to emulate the rich data flows.
Data and analytics capabilities. Having great customer data and knowing what it means are two very different things. Banks will need to double down on the investments they make into improving both their data management and analytics capabilities if they hope to compete on a level playing field with Super Apps.
A vision for the future. Banks will need to decide soon whether they plan to be a front-office player within a super app, a back-office enabler, or simply a piece of regulated infrastructure — and then start investing and evolving towards achieving that vision.
Building a super app with Velmie
With all of our years of experience and expertise, Velmie understands what it takes to build a Super App that is versatile and will stand out from the crowd. Our solutions are designed to cater to a wide variety of different market circumstances – not only now but into the future as markets and customer needs evolve.
We embrace innovation by developing modular and highly customizable solutions that can be used to build marketplace or Super App products. Our solutions enable our customers to be agile and adapt over time and we have the expertise and knowledge to build and expand a network of integrated partners within a Super App ecosystem.
Velmie banking platform comes with open APIs to enable smooth integrations and expand services and we have the resources to help our customers grow and add unique solutions along their journey to success.