“There’s an app for that” was coined by Apple in 2009. As a result, apps (single-use applications, such as Oracle Flexcube) have increased and have become an integral part of most people’s daily lives. New app types are emerging, though, and they pose a danger to the consolidation of market dominance. The “super-app” is becoming a key disruptive force in the internet marketplace and the digital financial services ecosystem. Is this a threat to the status quo, or is it an opportunity disguised as such?
What’s a super-app?
Using a single integrated interface or platform, a super-app provides a whole ecosystem of services tailored to the daily living demands of its customers. A marketplace of third-party offers is wholly integrated into the ecosystem. The utilization of enormous Flexcube data to connect with users and provide a broad range of experiences and services are typical features. This is the case in most cases.
Why are super-apps on the rise?
Since using apps has become a common practice for many consumers, they have grown accustomed to doing an increasing number of things online and on their smartphones—from shopping and banking to attending business meetings and watching movies to booking transportation and many other activities. Because of this, super-apps have consolidated a market that has grown to be too huge and cumbersome for consumers to keep up with.
In addition to providing a one-stop platform for many activities that customers want to do online, super-apps also offer several other advantages. Users will find it far easier to open a single super-app rather than manage hundreds of different programs. This is one of the primary reasons super-apps are gaining momentum on single-use applications in the marketplace.
Incorporating a variety of experiences, services, and functions on one platform that consumers are already familiar with allows super-apps to create seamless experiences that keep users engaged with the platform and its offerings. By delivering loyalty incentives, customers are also motivated to do more of their business via the super-app to get the most advantage from the program.
How is Open Banking powering super-apps?
Globally expanding use of Open Banking through Flexcube implementation is allowing super-apps to leverage financial data from numerous sources to understand their customers’ requirements better and provide financial goods to them. Thus, platforms will have even more opportunities to offer a wider variety of financial services and target each customer’s most relevant financial products and services.
Banks will use Open Banking to fuel super-apps in the following ways:
- Maximizing personalization: As a result of the Open Banking initiative, an ecosystem is created that proactively assists platforms in using consumer data and providing them with highly individualized services.
- Accessing everything on one platform: Once the super-app is ready to utilize Open Banking data, customers will be able to make payments, check their account balances, track recent transactions, and execute other typical banking activities via the app’s digital wallet, removing the need to open a bank’s own app.
- Using advanced technology: To construct customer-relevant solutions, banks may use analytics, artificial intelligence, and machine learning to exploit Open banking data. Banks can also use this to encourage a culture of data sharing and data-driven decision-making across the super-business app’s ecosystem.
- Connecting the right partners: As Open Banking extends into open finance and open data, super-apps will be able to access and interact with a greater number of partners, allowing them to deliver quick time to market for new products and an even broader consumer base for their customers.
How will super-apps affect banks?
To give its clients a smooth experience, super-apps incorporate financial services and Oracle Flexcube within their platforms. It follows for banks that a growing number of customers may choose to forego traditional banking applications in favor of the more comprehensive super-app. Additionally, super-apps that integrate digital wallets make it simpler for users to remain inside the super-app ecosystem and lessen their reliance on cash and credit cards.
Many banks have already become a part of the super-app ecosystem by offering unbranded “banking as a service” to the apps, allowing for all of this seamless integration to occur. As a result, many super-apps simply do not wish to deal with the regulatory framework around financial services, mainly when dealing with various markets and regulatory regimes at the same time. This implies that super-apps that provide e-commerce, loans, insurance products, investment platforms, and other services are forming strategic agreements with banks and fintechs in their major regions in order to deliver these services to their customers.
Because of their increasing popularity, super-apps can become a much more significant source of competition for banks than either neobanks or fintech already are. Because they are able to keep consumers engaged on their platform, they may make it almost hard for banks to persuade them to leave the super-app in order to utilize the bank’s standalone digital banking applications.
What should banks do now?
When it comes to dealing with the emergence of super-apps, banks typically have three options:
- Acknowledge market changes while remaining competitive by marketing their products and services.
- Extend their reach by embedding services (which may or may not be branded) into super-apps or other digital financial services.
- Compete head-to-head with the super-apps by establishing their comprehensive super-app that includes financial and non-financial features.
Now let’s take a closer look at each of these options:
Acknowledge: Banking expansion will be restricted if option one is selected. At the same time, well-established banks may maintain their market share since they are trusted brands with a huge client base and proprietary information. Even consumers who choose to remain with a bank may discover that they are utilizing super-apps for part of their financial requirements, resulting in the bank losing money on such transactions.
Extend: Several banks are expected to use the second method, which is Option 2. In the background, some companies will provide white-label services and earn income from them. The super-ecosystem apps allow others to continue to utilize their brand while using the platform to provide a better and more comfortable user experience. As a result of the restricted number of super-apps available, banks will need to move swiftly or risk being unable to find anybody with whom to collaborate.
Compete: The most daring banks will choose Option 3, those ready to reinvent their business models and change their vision to meet the obstacles of creating their ecosystem. These financial institutions will need to do the following in order to compete with the emerging and existing super-apps:
- Establish a vision: Before embarking on the shift to become a financial service or lifestyle ecosystem, banks must first determine what their function will be in this new age. Businesses that fail to carve out a distinct niche may be forced out of business.
- Embrace open data: Super-apps flourish when information may freely move between entities. To remain competitive, banks will need to investigate open data architecture and application programming interfaces (APIs), among other things.
- Become a data player: In order to harness the value of their own and third-party data and offer innovative customer experiences and journeys, banks will need to establish data management skills, including analytics algorithms and machine learning.
For the next ten years or so, we believe that consumers and companies are shifting toward super applications. In a future where super apps rule, how can banks achieve Flexcube implementation? And will they be able to react fast enough before super apps become a significant disruption?