As some large financial institutions are in the process of verticalizing and unbundling services and their target demographics to expand, other challengers are starting to do the opposite through the “Super App.”
These applications and platforms, which offer a range of merchant and consumer financial tools in a single platform, raise the question of whether or not they are effective at providing consumers worthwhile services.
“Super Apps are all about convenience and reducing friction. The average consumer has about 40 apps on their phone with almost half getting more than 80% of the user’s attention,” Payveris Chief Innovation Officer Marcell King said in an email to FinLedger.
“A Super App that contains the services of the top 20 apps on a consumer’s phone makes it significantly easier to access their most frequently used services,” he said.
Super Apps tend to be mobile-centric, include services from multiple industries and are changing the way users use their phones to reduce clutter and use tools that range from food delivery to financial banking.
“A super obvious answer is an app that makes your life easier. With one app, you can get everything delivered. You can get all the services that you need without having to download multiple apps,” Rappi co-founder Juan Pablo Ortega said at a panel titled “Super Apps – Where to Next” at CB Insights’ Future of Fintech event earlier this week.
“One side of super apps is that they lie somewhere in between merchants and sellers, handling the intermediate transactions. So they tend to be more consumer-facing applications, but it’s really important that you manage to engage the merchant side of the industry as well,” co-panelist and StoneCo. Chief Strategy Officer Lia Machado de Matos said at the event.
“Consumers want to have options so that’s another important element,” de Matos said.
While some say that individual, service- or demographic-specific providers will be able to provide better, more effective tools in the long run, King argues that when it comes to consumer-centric services, it is okay to work your way backwards from the user.
“It’s no different than how Amazon, PayPal, Apple, Google, and other consumer-centric services have approached it. Start with the consumer and work your way backward. If it’s easy for a user to find what they want and it’s easy for them to make a transaction, they’ll continue to use your app. If not, they’ll find another one,” King said.
Rappi’s journey
Founded in 2015, Rappi is one of Brazil’s largest startups with over $2.2 billion in funding across 10 funding rounds. The company’s most recent Series F in July was worth $500 million and shows that investors view the application’s potential favorably.
After beginning with a convenience store delivery service-based approach, Rappi has expanded its focus to include restaurants, electronics, e-commerce, travel and financial services.
“The idea is, ‘How can we make the credit card application as easy as ordering a hamburger?’, and how can we deliver the physical credit card in less time than a hamburger,” Ortega said.
“Which right now in Latin America is an extremely long process, and also how do we help our users get better and easier financial services? How can they send money between each other instantly or completely for free?”
Rappi isn’t just attacking multiple markets with their Super App, but all of the different players in each ecosystem. Of course they handle consumers, but the application also handles bank accounts for couriers who deliver food and enable payment processing for merchants who are selling products or services.
Stepping forward
While this idea of bundling services inside a single application is gaining popularity, it is not a new idea to add commerce capabilities to banking services. King says that when e-commerce first took off in the late 1990s, banks and credit unions were considering integrating these tools into their applications, but the timing wasn’t right.
“Fast forward 20+ years and the world is in a different place. All of these services have matured and the improvements to the individual apps tend to be smaller incremental enhancements. Therefore, integrating niche apps and services into a broader Super App seems like the next logical step to delivering that next level of convenience to consumers,” he said.
It will be interesting to see whether this model of an all-in-one product can continue success in Latin America, and whether or not it is possible for a financial service provider to create a successful “super” platform in the US.
“However, for financial institutions, it’s going to be a challenge to compete unless they can come up with a single, common branded app that consumers can connect with and that can scale. White label individual bank branded Super Apps would never be able to compete with big tech Super Apps. “