Fintechs are creating great apps, super fast
Ivan Maryasin, co-founder and CEO of Monite
The imperative super app
What are the old banks used for? It’s a question these giants are used to hearing. But now their neobank and fintech competitors – most under the age of ten – are under the same spotlight.
Their original visions are beginning to seem too narrow. End users are running out of patience with an application environment that expects them to do all the hard work of discovering, learning, and managing multiple digital tools. They want everything in one place, with one interface and one learning curve.
The most successful digital-native fintechs, such as Revolut and Square, are already on a rush to become “super apps”. They have branched out from a basic proposition and are now rapidly accumulating the widest range of abilities. Instead of offering a single or limited number of services, they aim for one-stop-shop status, where end users can perform any transaction or service they may need. Having earned the trust of their users in a domain, they are busy leveraging that trust to encourage the adoption of new features.
Square started in 2010 with a simple POS system. Today it is a platform for merchants with contracts, cash analysis, invoicing and payments, project management, customer database, building your store and much more. Revolut has announced its expansion into decentralized cryptocurrency wallets, the mortgage sector, and more recently, Expense managementas it pursues its own strategy to become a super app.
And, as the footprint expands, fintechs can bundle features to give users a better deal. For example, you can execute trades with Trade Republic, or you can trade and a bunch of other stuff with Revolut, for a much cheaper price. Other industry-leading examples include Klarna, PayPal, Oxygen, SoFi, Robinhood and Affirm, all of which bundle complementary services to create a diverse offering within a uniform customer experience.
In fact, history tells us that this is completely normal. As early as the 1920s, General Motors developed the technique of continuous differentiation: educating consumers to expect new features bundled with each annual model upgrade. The phenomenon of super apps is the same strategy applied to fintech. Adherence increases in direct proportion to the breadth of offers.
What are Super Apps?
Super apps bring multiple apps together in a single interface to provide an ecosystem of fully integrated third-party services, facilitated by a payment system.
The concept is not new. WeChat in China started as a simple messaging platform and has grown into a super lifestyle app with over 1.2 billion users and an ecosystem of over 1 million mini apps. This is a trend seen in Southeast Asia, India and South America – AliPay (China), Gojek (Indonesia), Grab (Southeast Asia), Zalo (Vietnam), Paytm (India), Rappi (Colombia) and Mercado Libre (Latin America) – while also emerging in the West.
There is a distinction here between fintechs that started with an offering and are expanding, and aggregators that have created digital experiences or marketplaces and connect users to an existing ecosystem for digital banking and financial services. Examples include Curve, PayPal, Google and Apple. This approach favors organizations with existing platforms and is therefore likely to be less attractive to fintech startups.
A super app strategy should appeal to any existing digital platform (or organization currently without a platform) with a large number of users who share a common business goal or lifestyle. With a great app, they can then combine existing end-user data with new insights from the end-user’s range of activities and interests.
By taking this information and placing it in the larger context of what it reveals about the customer, the super app has the potential to become the gateway to workflow that provide what a customer wants to do – rather than just a series of disconnected financial services.
With integrated finance and open banking, any provider has the potential to become a super app, although a large existing customer base is a clear advantage to becoming a world-class leader. With their huge legacy customer bases and ever-reliable brands, legacy banks should be everywhere, although many aren’t.
Neobanks and fintechs currently focusing on point functionality should also take a look. As players like Revolut expand their footprint, a narrow set of products/services will seem less and less appealing to subscribers.
How to create a great app
There are two ways to expand a base offering: build or buy. Building, which usually involves raising funds to develop new code from scratch, was the standard approach until relatively recently. Obviously, this is expensive, slow and high risk. Plus, you’re putting tremendous pressure on hiring new talent, which is one of the hardest things for any business to do.
White labeling used to be the conventional buying tactic, but it can’t deliver a true super app because it involves linking your app and someone else’s app and calling it a single product. A white label product may have your logo on it, but it’s not yours: it’s hard to figure out what’s going on inside the software and connect it to your main program. White labeling will also do nothing to increase the engagement or “stickiness” of your main app, which is usually one of the main points of adding new features.
Covered by these restrictions on both the build and purchase side, super apps used to be very difficult to create. But this is no longer the case. This becomes easier with another “purchase” option – embeddable capabilities – which is now widely understood and available.
Integrated Finance leverages APIs to quickly and seamlessly integrate functionality into apps and websites. It avoids compromises on branding and UI, and leaves the platform owner in full control of UX and user data. With only API integrations to worry about, in-app finance is much faster and less risky than the build option, and it’s not even close – buying in-app finance products rather than building them can save money. months of work and literally millions of dollars. Even if your company manages to create its own financial products and services, these probably won’t be as good as those coming from a specialized vendor that is solely focused on creating this type of thing.
What’s next for super apps?
Extrapolate from where we are today and it’s not hard to see that the future winners will be those who adopt a super app strategy. They are already cutting out smaller or slower competitors and stifling their growth.
The quality of the technology is not the issue here. Integrated finance ensures that it will be uniformly good at all levels. USPs will depend more on factors such as customer understanding and trust and market specificity. You don’t have to be Revolut to deliver a great app. There will always be giants, but now we can also have super applications serving niches.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.