Supercharging the Banking Business Model with Super Apps
The Fintech Forecast is a series of guest articles published each month from thought leaders at ACI Worldwide.
Author: Elise Thrale
Digital consumer habits are evolving daily, and in the post-pandemic period, this evolution has accelerated irreversibly. According to the UN, the percentage of consumers who made eCommerce purchases increased from 53% before the pandemic (2019) to 60% since the pandemic (2020/21). It is becoming increasingly difficult to satisfy all consumer needs and to adapt to their new and demanding shopping patterns. The alternative that promises to meet many of these needs has arrived in the form of a marketplace. They go by the name of Super Apps. Robust applications that have emerged as an alternative to many others, as they combine different services and products on a single platform, achieving a holistic experience. This trend originated in China, with the emergence of Fintech companies such as WeChat and Alipay.
What role do banks play?
Now, to understand what the role of banks and payment technology companies in this new ecosystem is, we must first know what the main objective of these Super Apps really is; what are they looking for with the unification of so many services and products under one roof? How can we make the most of this new opportunity?
Let us look at Super Apps as a mini ecosystem, with the objective of offering users the possibility of chatting, shopping, banking, all from the same platform.
Imagine a fortress, where inside you have everything you need for a basic daily life, you control all your movements and all your money. Every time you go out to buy something that you do not have in your ecosystem, in this case, inside the Super App, it means an extra expense. So, you will always try to move inside your fortress, making as few movements as possible in the outside world. In other words, they want to decentralise, and reduce to a minimum the movements dependent on centralised banking ecosystems.
From dream to reality with open banking
But how do these apps help the economy? How can banks and payment technology and intelligence companies enter this ecosystem?
Super Apps need businesses to be able to offer services and products to their users, just as businesses need Super Apps to extend their solution offerings. But how do they get to know what their users need? What provides them with the information they need to build customer loyalty?
Enter, open banking and APIs. Open banking offers secure interoperability in the banking industry. It allows third party payment services to access bank transactions and other data from financial institutions that these Super Apps need to be able to expand and provide their customers with the security they need for their payments.
APIs (Application Programming Interfaces) are used to develop and integrate application software, enabling communication between two apps. In other words, APIs are the technology behind these Super Apps so that they can integrate multiple providers into a single platform.
Looking at Super Apps from a macro perspective, we must understand that they are another way of inserting money into the economy. The need for these super apps is increasing and they need more and more technology to be able to continue developing. In order to get on the new Super App train, banks and financial institutions must invest in advanced technology to be able to offer their customers greater convenience and loyalty.