By Konstantin Bukin, Managing Director at Saritasa, a full service mobile, web, software, 3D and IoT technology solutions provider.
Banks, credit unions, and financial institutions are the foundation of consumer financial services, yet they lag when it comes to technology. Consumers use smartphones and the internet to manage every aspect of their daily lives, from booking a vacation to delivering their meals. However, when it comes to financial services, the banking industry has yet to catch up with third-party financial applications. People are increasingly turning to neobanks, e-wallets like Apple Pay and Google Pay, funds transfer applications like Venmo, retail services like Square, and other software to manage their financial lives. Financial super apps can restore banks as the focal point for consumers’ financial needs.
Today’s digital natives are increasingly frustrated with using multiple apps to manage their lives. Consumers don’t want to deal with multiple interfaces and learn how to use new tools to manage everyday activities. They want service providers like banks to provide all their services in one place.
Granted, banks and credit unions have made strides in creating mobile banking apps. However, the user experience leave much to be desired. Many traditional bank apps have limited functionality and even re-direct to web browsers. People want easy access to more than basic banking services.
Revolut, a European bank and fintech company, handles everything related to personal finance in a single app. Similarly, Square is expanding from simple retail e-commerce transactions to adding banking, marketing, and staffing services for small businesses. The future of online banking is super apps that simplify all aspects of money management through a single, easy-to-use interface. If traditional banks don’t start investing in financial super apps soon, they’ll be left in the dust.
What Are Super Apps?
Super apps are becoming increasingly popular in consumer markets worldwide. For example, WeChat in China combines social media, chat, free messaging and calling, mobile payments, and more in a single app. WeChat has more than 1.26 billion active users making it the largest standalone mobile app. Other apps, such as Alibaba and Alipay, are gaining similar momentum.
Fintech companies like these are breaking down barriers to entry for emerging financial services and bundling them in applications that consumers find appealing. In markets like Asia, with a sizable underbanked population and widespread adoption of smartphone technology, these super apps provide all the essential services needed via a single app.
In North America, large banks and financial institutions have a large captive user base looking for mobile financial services. According to Statistica, there will be 216.8 million digital banking users by 2025. Chase has more than 18.5 million checking account customers and 25 million debit card users. Wells Fargo has more than 70 million customers. Bank of America has 68 million customers. Any of the big banks have a user base large enough to warrant the development of a super app. Even mid-size and smaller banks can benefit from a banking super app that offers more convenient services and promotes customer loyalty.
Super Apps Are Misunderstood
For various reasons, super apps like WeChat don’t exist in the United States. Americans have become used to using different apps for different needs, despite being less convenient. It’s not unusual to have 25 or more financial relationships, each with its own mobile app to manage the account.
Interestingly, consumers play little role in driving the demand for service bundling. Rather, fintech competitors lead the charge. PayPal, Venmo, and other fintech services want to grow, and the easiest way to do that is to add functionality. As a result, banks are seeing increased competition from emerging fintech super apps. Banks need to expand the capabilities of their mobile banking apps to remain competitive.
Financial institutions also need to understand the true value of super apps. A super app isn’t just a bundle of related services. It’s an entire ecosystem offering a unified experience to accomplish various tasks. All those functions operate within the walled garden of the super app.
Super Apps Can Be Banking’s Secret Weapon
Super apps promise to be the competitive differentiator banks need to increase deposits and expand their business. Banks can readily expand their current mobile banking platforms to include additional services, such as:
- Chatbots for customer support
- International exchange and currency services
- Cross-border transactions and payments
- Central management of multiple accounts
- Retirement planning and investment tools
- Household budgeting tools
- Tax calculation and payment
- Credit cards and credit line management
- Stock market investment and management
- Income and expense tracking for small businesses/freelancers
- Cryptocurrency support
These are just a few value-added services banks can offer via a super app, giving customers more control over their finances from one location and a better customer experience. Deploying super apps also gives banks more access to customer data to create a more personalized experience. And super apps make it easier to offer new financial services that generate more revenue for banks.
Thanks to mobile computing, Americans have been looking to non-financial companies like Apple, Google, and even Starbucks for app-driven financial services. Now is the perfect time for banks to reclaim control of consumer finances by building their own super apps. Third-party developer resources and financial mini-apps are readily available and affordable. There will still be super apps like WeChat and Revolut, but there’s plenty of room for banks to create their own super apps to meet customer needs before they become relics of a pre-digital era.