FINTECH SNARK TANK COMMENTS
The concept of “super apps” is getting a lot of attention these days. PYMNTS.com recently reported:
“Most fintech companies that started a decade ago came to market with a single, easy-to-use financial product that customers loved. Over time, however, these services expanded with additional products and services as companies sought to grow their businesses, evolving into what are now known as super apps.
And in a report titled Super Apps in bankingInsider Intelligence said:
“[US] The increasing time consumers spend with mobile and their overwhelming choice of products and providers is driving demand for consolidation in financial services. Super apps are emerging as the solution to meet this demand and improve the digital customer experience. Banks need to start deciding today how to engage with the super app trend to stay relevant to consumers. »
Both of these views are flawed, driven by an incorrect definition of super apps and a misconception about consumer behavior and attitudes.
What is a great app?
Although not a common term in the United States, the concept of “super app” is often misused and misunderstood. The simple act of selling many different types of products and services on a mobile app not make an app a great app.
Super apps are ecosystems. They are closed experiences that make it easier to complete a wide variety of tasks, as long as the tasks take place within the walled garden.
To date, super apps don’t really exist in the US, but they’re dominating in China. A screenshot of one of the leading super apps, WeChat, shows the breadth of services integrated into a single app.
The following table shows a comparison of the services included in three of Asia’s most popular super apps.
Great apps have unique technical aspects
The term super app is often misused in the United States because the technical aspects of a super app are misunderstood.
Super apps rely on mini-programs, lightweight apps that run inside another app. They don’t need to be downloaded or upgraded through app stores. They allow one application to service multiple applications.
Mini-programs have a number of advantages, including:
- The rapidity. Mini-programs are cached on the phone, which makes them load faster than a mobile app.
- User experience. Updates are not necessary with mini-programs because the latest version is automatically loaded.
- The integration. Mini-programs are tightly integrated: >60 entry points, directly shareable in chats, deep links to specific sub-pages.
- Cost. Mini-programs typically cost 20% to 50% of an application’s development cost, in part due to a faster release time.
Super apps took hold in Asia because Asian consumers had underpowered smartphones that weren’t conducive to running 40-50 separate apps.
However, the majority of smartphones in the US pack a lot of power.
Americans don’t need great apps
Insider Intelligence says Americans “struggling with an overload of vendors and product choices are yearning for service bundling, driving demand for great apps.”
Not so. It’s not uncommon for a millennial couple in the United States to have between 25 and 40 financial relationships, encompassing their financial accounts and the tools they use to manage those accounts.
The “desire for service bundling” is not coming from consumers, but from vendors like PayPal and other fintechs who view their narrow product line offerings as barriers to growth.
Americans never wanted a one-stop shop in financial services or retail and don’t want it now. The “walled garden” approach is too limiting for most American consumers.
Great apps don’t come to the US…
According to Insider Intelligence, the super app model in Asia has taken off thanks to two factors: 1) unbanked populations are turning to mobile payments and 2) strict app market regulations. As the report points out:
“The Google Play Store is not available in China, Apple is limited in what it can include on its App Store, and even Huawei’s AppGallery is missing many major apps. To fill in the gaps, apps like WeChat and Alipay have allowed third-party developers to embed mini-programs for other services, turning them into great apps.
None of these factors are present in the United States.
What is present in the United States, however, are privacy and data security issues. Although the United States has yet to take the regulatory action that other countries have taken, those days appear to be approaching as a US regulator examines Apple’s use of consumer data regarding its advertised buy now, pay service. later.
Another factor present in the United States is the economic structure of the country’s major industries, many of which are dominated by oligopolies – three to four very large companies that control 60% to 80% (or more) of the market share of an industry.
A super app aspirant will meet resistance from oligopolies who may see themselves as potential creators of super apps.
…Except maybe at Walmart…
Walmart may be the exception in the United States. Walmart’s prospects for a super app in the US are legit because the retailer has:
- Underserved clientele. Virtually everyone in the United States shops at Walmart at some point, but the company’s core segment – low-to-middle-income, non-urban consumers – are often underserved by the oligopolies that dominate many industries.
- Ecosystem. Walmart has decades of experience building an integrated, cross-industry supply chain. Except Amazon, who else can make that claim?
This last point is why much of the super app talk (from an American perspective) is nonsense. A great app is an integrated ecosystem, not just a variety of products.
What about Apple? Big Tech companies have the resources, the user base, and the variety of products with which to build a great app, but its walled-garden approach will prove too limiting for most Americans.
…But definitely not banks
Insider Intelligence believes that “banks must decide how, not whether, to dive into super apps.” Maybe for banks in other parts of the world, but not in the United States.
There are maybe five banks in the United States with the resources to even think on creating a super app (the four banks with $1 trillion in assets and Capital One).
But where is the consumer interest in getting ride-sharing, food delivery, travel booking and other services from a bank?
On the contrary, the Americans are interested in opposite— they want financial services from non-financial services companies like Home Depot, Playstation and Coach.