The advent of easy internet access and the prolific availability of smartphones has enabled consumers to do many day-to-day activities using their mobile phone through apps. While initially, apps usage by was mostly around socializing and shopping, gradually there is an increase in the usage of apps for financial transactions.
With the surge in fintechs, advances in technology, and overall support for open banking, many apps today are focused on helping consumers smoothly carry out their financial needs and activities from their fingertips. At first, financial apps were launched to provide consumers with limited services, and there would be a specific app for certain services. Now we are moving from having specific financial apps to Financial Super Apps.
So, what is a Financial Super App?
It is basically a one-stop shop which provides a slew of services like payments, banking transactions, investment, wealth management, etc. Financial Super Apps help consumers with more than one financial service on one platform.
Initially, when the financial apps were launched, they were focused on making payments for utilities, payments against shopping transactions, P2P Payments and others, which is termed as Fast Money needs of the consumers. Slow Money needs, in contrast, refer to financial transactions, which involve planning and consumers paying over time like mortgage products, insurance products, and wealth creation investment.
While Fast Money is transactional, Slow Money involves usage of cognitive capabilities.
A recent example of Financial SuperApps moving to Slow Money is Square’s Cash App launching stock trading, and PayPal supporting bitcoin transaction.
What’s the benefit of SuperApps?
By providing more services, the SuperApps are encouraging high daily usage rates, which means the end users are more engaged with their respective banks through their mobile devices. When PayPal started supporting Bitcoin, the price fluctuation, made the PayPal App more engaging. It was observed that the PayPal users holding cryptocurrencies tend to log twice as often as they did before.
Over a period, app providers gather sufficient data regarding the consumer’s behavior and spending pattern, which helps them access rich user data, which leads to cross-sell and upsell with a lower cost of customer acquisition.
The major opportunity for SuperApp providers will be to understand the consumer’s financial life cycle and provide holistic support for their financial needs. Sooner or later, the SuperApp will start supporting some of these Slow Money products:
1. Private Equity
2. Money Market Instruments
3. Insurance Policies
4. Precious Objects
5. Debenture or Bond
Considerations for SuperApp Makers:
While the app provider looks forward to increasing the product spread for their end customers, they need to carefully consider the Data Privacy, Security, Local Regulations, and Localization requirements of the geography where the SuperApp will be used.
It’s a win-win situation for the end customer as the SuperApp provides them with a single Go-To resource for any of their financial tasks. With the cognitive capability built-in, the Super App will be better placed to provide valuable guidance for investment and financial planning to the end customers.
SuperApps have the power to disrupt the traditional financial system and engage better with the underserved markets. They are a great method to retain existing customers by providing a better user experience and functionality beyond basic financial services. With the pandemic, retail banking behavior has tremendously changed as is the case with almost every other sector. Consumers do not prefer to visit a branch in person. They will need more and more access to a range of banking services from the device of their choice. Banks that are able to quickly adapt and move to provide a superior digital experience will always have the consumer preference.
Of course, security and protection will continue to be of utmost priority. Now is the time when banks must double down on their cybersecurity practices and Governance, Risk and Compliance measures. This is a non-negotiable aspect. But more on this later.