Mobile Applications

Can Banks Get On The Super App Train?

Banks can capitalize on customer loyalty

Here’s some bad but potentially motivating news about banks: So far, they are missing out on an emerging opportunity to get into the “super app” game, which is shaping up to be one of the biggest focuses of payments and retail innovation in the 2020s.

That was one of the main messages from a new PYMNTS discussion between Karen Webster and Anabel Perez, co-founder and CEO of NovoPayment. “From a financial services perspective, we haven’t seen a super app originate from a pure financial services provider and move to eCommerce,” Perez told Webster.

What is a “super app,” you might ask?

Simply put, it’s a mobile app designed to improve and ease payment and retail flows for consumers. Super apps create differentiated financial ecosystems in the back end (and front end), incorporating capabilities like an aggregation of multiple service providers, digital account origination, embedded KYC abilities and real-time payments (to name a few).

“Super apps are a great lens through which FinServs can see the broader state of collaboration and ecosystem building.”

Looking at the super app through that lens, Perez sees two types of opportunities for banks and FinServ providers: the retail or merchant aggregation side. Perez, who’s had first-hand experience with the Super App economy with what has been described as Latin America’s super app frontrunner, Rappi, believes that this is an opportunity for FIs — a rich vein of opportunity yet to be tapped.

Banks that step up to the plate, Perez said, have a chance through ecosystem collaboration and partnerships to generate a healthy deposit and transactional revenue growth.

App Friction

As Webster recently noted in a column about PYMNTS research into the subject, it can take consumers four different apps and four different interactions across their existing apps — and many minutes — to close the loop on that single flow.

Perhaps the best — and only —  examples of super apps (also called “everyday apps”) come from China’s payment and eCommerce apps ecosystems such as WeChat and Alipay. One might argue that PayPal has made a go of it in this space, but they are not a traditional financial services provider or bank, Perez noted. Amazon sure has a lot of tools and activities under its app umbrella, but an actual super app would include more than just the ability to order retail products from a seemingly endless array of sellers: A real super app would include other activities such as ride-hailing and financial account checkups, she noted.

Most of her conversation with Webster centered around the super app opportunity for banks. After all, as Webster pointed out, banks (at least in the U.S.) tend to be highly trusted by their customers, giving them a significant potential advantage when it comes to creating and deploying super apps. Not only that, but in developing markets, there is a relative lack of access to financial services, which can also create a super app opportunity for banks.

Perez contends that financial institutions that embark on the super app journey have an opportunity to clean up all the mobile clutter consumers face daily — clutter that creates friction. After all, banks occupy the sweet spot — the place where consumers put their money and the place from where they move it. Moreover, she contends, is the most logical starting point on the consumer’s path to purchase.

A recent PYMNTS study of 1,037 mobile-using consumers in the U.S. found that immediately after waking up each day, consumers access one of more than 44 apps across those different categories — from email to calendar to mobile banking, social media, shopping and messaging.

App Opportunity

However, do banks understand this opportunity?

“There are no technology barriers,” Perez said. “The main banks are already interconnected with other sectors.” That’s one key of these super apps, of course — digital connections with other apps and businesses are an essential part of consumers’ daily lives. The implication: if banks don’t take advantage of those connections, consumers will use other apps, and perhaps be attracted to another business’s super app, depending on circumstances.

In short, this is a time for banks to play offense instead of defense, at least when it comes to super apps, Perez said. Right now, banks are taking a somewhat passive approach in this area, which promises to become hotter as more consumers demand less friction in their daily lives. The risk, Perez says, is that such an approach will eventually render banks as utilities instead of institutions that take advantage of their strengths, connections and trust to build and deploy those apps that make retail and payments more seamless and less time-consuming.

“The [FIs] are giving white space to others to be the technology service providers in their (banks’) main activities.”

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