Super-apps are rapidly becoming the next big thing in tech innovation following the success of WeChat in China, writes Martin Haering
There are approximately one billion users of Tencent’s WeChat. The app gives users access to an almost countless number of useful services, all seamlessly integrated onto one platform, under one log-in.
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It began as a platform for messaging not unlike WhatsApp and gradually evolved to offer ride-hailing, payments services, hotel and flight booking and games. Nowadays, WeChat can be used to get a takeaway, book doctor’s appointments or flights, pay utilities and even file for a divorce.
Tapping into new data
Super-apps such as WeChat began appearing across APAC and beyond over the last decade. AliPay in China, Grab and Go-Jek in Indonesia, Line in Thailand and now Rappi in Latin America are all examples of super-apps that began as single service offerings for ride-hailing, food delivery or messaging.
As they rapidly expand into other service areas including financial services, they are now beginning to cater to the entire customer lifecycle.
Through these super-apps, these firms are able to collect vast amounts of data needed to hyper-personalise customer experiences and provide offerings on a level that – at this stage – incumbent banks can only dream of.
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By GlobalDataIn many cases, Artificial Intelligence is then used to analyse the gathered data to learn even more about the individual customer and offer tailored products and services exactly when they are needed.
Disruption on the horizon
The likelihood of these super-apps continuing to disrupt banking in APAC in the coming years is high. Last year, Grab Financial started offering insurance to consumers, and this year will also start offering loans to SMEs and micro-entrepreneurs.
Grab is capable of assessing users’ credit worthiness in greater detail than traditional methods of scoring by analysing data collected via GrabPay, ride-hailing and location.
WeChat and AliPay also both offer basic banking services, as well as saving and investment products. Go-Jek recently announced a partnership with Siam Commercial Bank to allow SCB customers access to their e-wallet and is waiting on approval from the Bank of Thailand to start offering loans.
While the vast majority of financial services being offered on these apps are still underwritten by incumbent banks, these banks are being disrupted from the front-end customer experience and being pushed into the background, much akin to utility providers.
For now, banks are benefitting from the extra digital channels provided by these super-apps as they are given increased visibility and access to a vast number of consumers. But if they are to survive in the long-term, they will need to seriously re-think their service offering and business model, or risk fading into oblivion.
For those customers that are willing to share their financial data, predictive analytics can be used to proactively suggest suitable products and services and speed up the onboarding process.
While consumers in the West may traditionally be more cautious about sharing their data, a survey last year by the Open Data Institute showed that younger generations are increasingly willing to do so where it brings a fair value exchange in return.
It states that “38% of 18-24-year olds would be happy to share data about their spending habits to help save them money via things such as new savings accounts, insurance policies, shopping discounts, compared to 15% of over 55s.”
A separate survey by the DMA showed that 49% of businesses think that GDPR – which was implemented in early 2018 – has positively impacted consumer trust when it comes to data handling. Financial firms should be capitalising on this growing trust and squeezing as much value out of customer data as possible.
Taking notes
The possibility of similar super-apps appearing in the West needs to be taken seriously, and we can no longer ignore big tech initiatives like Facebook’s Libra project.
Banks in Europe and North America should see these developments as a wake-up call. They need to learn from what is working elsewhere and consider how they can serve customers better, not just in banking, but also in other adjacent areas. To quote KPMG’s paper ‘Super app or super disruption’, “The world of industry vertical 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 their ecosystem as much as the value of their balance sheet.” Banks also need to seriously reconsider how they optimise their customer data.
Siloed data is one of the biggest barriers to data utilisation and personalising services using AI, and banks are being held back by legacy systems that cannot support this technology. To compete, firms must invest in their organisation and management of data, and their analytics capabilities.
So, what are the options?
Banks can become mediators, opening up their infrastructure to complementary third parties such as health and insurance providers, retailers and even travel apps.
Co-operating with other businesses to expand offerings means they can start to support new aspects of the customer lifecycle. For example, challenger bank Starling allows users to integrate Direct Line insurance into their bank account, making it easy to get home insurance quotes in-app. Additionally, Open Banking and open APIs that pull bank accounts together on one platform mimic the bundling of financial services found in super-apps and helps to make handling finances seamless for customers.
Banks will increasingly have to fight for a customer-facing position in financial services, so that they can keep acting as data gatherers rather than just back-end data providers for super-apps and fintechs.
The key to this is innovative co-operation with tech platforms and strategic use of Open Banking, because locking down data will only mean getting locked out of a new world of innovation.
Martin Haering is CMO, Finastra,
