In much the same way that a myriad of standalone apps are now converging into “super apps,” the emerging “super FinTech” model is powering new payment experiences leveraging digital trust for banks, nonbanks, FinTechs, moving the connected economy ahead in the process.
Before diving in any deeper, what’s a super FinTech? Not unlike the super app analogy, this new group of entities act as enablers for financial institutions (FIs), enterprises, and other fintechs, speeding deployment of new services by using platform efficiencies accessing multiple services.
Saying the FinTech revolution of the past five years actually began more like 10 years ago with the dawning realization that in-demand banking services needed to morph into Banking-as-a-Service (BaaS), as Akash Sinha, co-founder and CEO at Cashfree Payments, told PYMNTS’ Karen Webster that this is accelerating now after two-plus years of intense digital investment and use.
Noting that consumers today have established deep reserves of trust with online merchants and digital payments from nontraditional players, Sinha said, “Tomorrow, I think these customers would want banking services from any company they trust.”
“If I trust an eCommerce company, if I trust a travel company, then I’d be OK to get banking or financial services from them because I trust them as an entity. That’s where we see new opportunity.”
He described ways this is taking shape now that don’t impinge on existing banking relationships but instead enlarge them via new integrations and partnerships that are expanding the pool.
For example, an eCommerce site offering a credit card to a frequent eligible shopper encourages more purchases on the site by that customer.
It’s a straightforward use case, but that doesn’t mean it’s easy to do for an online merchant. Most need help to deliver these appealing offers because of the complex back-end processes involved.
“Even today, a lot of eCommerce companies who offer these credit services or payment services … do it by building things in-house or partnering directly with banks or financial institutions,” Sinha said. “That’s not easy job. Not every eCommerce company can do that.”
Making this happen is increasingly the job of super FinTechs like Cashfree Payments.
See also: India’s Cashfree Payments Claims Top Share in Market
Payments in Context
As sites and apps obsess over engagement — and rightly so — the stickiness of financial products offered by our favorite eCommerce sites or other trusted entities becomes clear.
Describing the various ways that various players are now well positioned to offer embedded payments to their large user bases, Sinha said, “If you look at any eCommerce company, they started with product, but they’re also slowly getting into services.” That’s the basic path.
With the proper permissions and in the right contexts, he said, this evolution will continue as more of the digital commerce world awakens to the growth potential of services like BaaS.
Such use cases are proliferating along with the digital shift in how we eat, play, shop and pay. And super FinTechs enabling eCommerce with financial products is embedded finance in action.
“We believe payments always happen in a context,” he said. “I don’t pay someone for no reason. A lot of these companies built what is more contextual to them.”
If you’re chatting with a friend on a social platform and want to send them $100 at that moment, while chatting, I should be able to send money” via embedded payments.
If the context feels right, there’s an increasing likelihood the consumer will bite. This scenario has major applications for gig economy and creator economy workers.
“If I’m a worker on your platform and I don’t have good banking support, good payment support, I’d want you to provide me that service,” Sinha said. “Whatever stakeholders internet companies are working with today; they’ll have incentive to bring them inside their personalized payments and banking products so that they can improve their stickiness.
“An eCommerce company will have more interest in giving some credit products so that you can use that on the platform in a convenient way. Or suppose you are building a SaaS for doctors, or for, say, teachers. Then you’d also want to embed core banking services as part of the software, so their doctors can have easy access to everything they need.”
All this upgrades the value prop of platforms, ensuring higher engagement and lifetime customer value. If the credit offer goes well, that can grow to personalized loans and working capital for businesses. Each time, the data generated informs the next offer, flywheel-style.
Read more: Cashfree Payments Intros KYC Automation Tool
Make Banking Cooler
As for the features that resonate with digital-first and digital-native consumers who trust Amazon or PayPal about as much as their 100-year-old bank, that’s contextual too.
In super FinTech style, Cashfree Payments is segmenting offers “into four to five pockets” including a deposit application programming interface (API), a lending API, a payments API and a wealth management API.
“We want to offer these as independent services, not to buy everything,” he said. Rather, the company wants to serve products contextually in ways it “believes is more valuable for their customer.”
Sinha said in this way the super FinTech acts “more like an enabler, more like someone who can do access control and someone who can also help banks take action faster if there is any breach or any discomfort in the mind of the customer.”
When asked about the role of identity verification and know your customer (KYC) compliance in this new world of nonbanks offering credit cards and loans, Sinha said that whether it’s his home base of India or another market, he sees identity “as complementary to banking services.”
“Without identity, I don’t think this can exist,” he continued. “We also need innovation on the identity side. I think we cannot make it cumbersome or full of friction, otherwise this won’t scale beyond a certain point.”
Along with this comes higher levels of personalization as banking services are broken apart, then made available like building blocks to be used as needed — perhaps in a super app.
That’s where Sinha sees this all trending, as super FinTechs enable more affinity groups with financial commonalities to create tailored finances for specific users, not just a DDA and a card.
“We have come across companies who want to build a new bank, say for teenagers, who want to build new banks for content creators, and they want to plug in banking services for their users,” he said.
“As an industry, we don’t see banking from an experience lens, but that’s what new generations need today. People are so engaged with Snapchat, Instagram. They want a similar experience with bank. Banks have to be cool.”
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