The Rise of Super Apps in APAC: Opportunity or Threat?

Smartphone apps have grown in popularity, coinciding with the growth of mobile computing. Apps offer convenience and focus and are now a part of everyday life for most people. In 2021, mobile internet users spent a whopping 88% of their time on apps and just 12% on mobile browsers. Apps have also been evolving. Each business has its customer-facing app. They often have multiple apps for different functional areas or product lines. But a new breed of super apps is rising to disrupt the existing app ecosystem and the online marketplace.

What are super-apps?

Conventional apps deliver a single function or utility. For instance, users need different apps for banking transactions, purchasing tickets, or shopping. Each brand has unique apps. A super-app consolidates services and brands and offers users the full range of services they need in their daily lives.

Super apps co-opt multiple third-party offerings in an integrated platform. The app integrates these offerings into a unified ecosystem and delivers a seamless user experience.

These umbrella apps, shaped around users’ everyday lifestyle needs, co-opt functionalities such as:

Payments and financial services, including mobile payments, insurance, investments, and loans.
Retail services such as grocery purchases, movie ticket bookings, bus tickets, food ordering, and more.
News and entertainment
Ride-hailing
Other functions such as job search, real estate, and more.

Super apps consolidate services that users found too large and unwieldy to keep up. These apps:

Offer a one-stop platform for tasks, sparing the users from downloading and maintaining numerous apps.
Spares users from remembering separate login credentials for each app
Offer users better deals through loyalty rewards.

Super apps have become especially popular in the Asia Pacific region. Millions of users patronise them for everything from shopping and banking, from booking movie tickets to bus tickets, and more.

Some of the leading super apps in the APAC region include

WeChat, with 1.24 billion users. China’s leading social app has morphed into a super app. It offers messaging, social networking, shopping, payments and other services.
AliPay, with 230 million users. Alibaba’s Alipay is ubiquitous and used by millions in APAC.
Grab, 2ith 187 million users. This ride-hailing app is now a super app offering food, courier, financial, and transportation services.
Gojek, with 170 million users. Indonesia’s GoJek super app packs 20+ services across transportation, food, shopping, payments, news, and entertainment.

How is Open Banking powering super apps?

Financial services is one of the major functionality offered by all super apps. Super apps leverage open data to integrate financial data from multiple sources. Customers get a world of convenience. They may use the open banking data through the super app to:

Perform many traditional banking functions, such as checking account balances and making payments.
Use digital wallets instead of credit or debit cards.
Subscribe to savings, investment, and insurance products. They may make comparisons among the products available from different providers easily.
Undertake e-KYC (know your customer) mandates.

Super apps access and connect with a larger number of partners to provide faster speed to market for new products. Its broad customer base, compared to a standalone bank app, enables an upward spiral of more partners and hence better products.

Many banks have joined the bandwagon by integrating their services into the super-app ecosystem. Such banks offer unbranded “banking-as-a-service” through super apps. For instance, China’s WeChat and Vietnam’s Momo offer various savings and investment services from banks. Banks help super apps overcome the onerous regulatory framework around financial services.

But with most services available through the super app, many customers bypass banking apps in favour of the integrated super app. Banks face the threat of becoming a commodity player, or a router of transactions, without direct connection with the customer. The super apps, which offer banking products, gain the customer’s loyalty. Customers may compare products and switch their providers through the same app.

Customers favour super apps over their bank’s in-house app because of a fundamental change in approach. Most banks focus on pure-play payments. Super apps recognise that for most customers, payments, while vital to complete a transaction, are not the end in itself, but only a means to the end. As such, super apps seek to make the payment part of the transaction invisible and focus on the end product. For instance, it focuses on the insurance product or the bus ticket and gives multiple payment options to buy the product. In a traditional banking app, the customer selects the payment partner first and then accesses the product needed. In a super app, the banking transaction medium continues to underpin the transaction but is behind the scene.

How banks can leverage super apps

One strategy for banks is to leverage the brand within the ecosystem of the super app. The bank or financial institution may use the super app platform to create a smoother and more convenient user experience.

Banks can tap super apps to:

Offer a better experience for their customers. Super Apps co-opt analytics, artificial intelligence, and machine learning to deliver cutting-edge products. Most individual banks do not offer such features. If they do, it comes at a higher cost to the banks.
Strengthen analytics and data management capabilities, and get better insights on their customers. Banks can leverage customer data to create personalised experiences. They can tap into the data from super apps to get a more comprehensive perspective of their users.
Deliver better UX. Super apps have CX as their core concern. They are also flexible and adapt to customers’ needs. For banks saddled with their core banking activity, focusing on the UX of their app is an afterthought. Even when banks give it the seriousness it deserves, super apps do a better job more often than not.
Connect with a broader pool of customers. Super apps allow banks to reach out to prospects in the super app platform and would not have come to the banks’ in-house app.
Connect with customers better. Customers use super apps for their daily transactional activities. The bank’s presence in the super app improves visibility, builds trust, and enhances brand reputation.
Streamline processes. The insights available from super apps make it easier to fulfil support processes such as digital onboarding. Super apps also enable authentication, biometrics, and facial recognition for self-service.

Taking the challenge of super apps head-on

Another strategy for banks and financial services to overcome the challenges posed by super apps is to launch their super apps. Most banks already have loyal customers. They may embed more services in their existing apps and digital platforms and offer comparable services to what super apps provide. For all the popularity, the number of super apps is still limited. Banks and financial institutions have a valuable opportunity to enter the market. They may use their institutionalised brand value to gain market dominance.

Banks may broaden the functionality available in their apps. For instance, they may add various insurance products, ticketing options, and e-commerce. By developing super apps, banks retain control over the ecosystem and reinforce customer loyalty.

Banks and financial institutions out to develop their super apps would, however, need to:

Reimage their business model. They will need to position themselves as a provider of a lifestyle ecosystem in addition to providing financial services. They will also have to redesign their customer-facing apps, websites, and browsers accordingly. Many banks ponder setting up neobanks or subsidiaries to take on the super apps without diluting the focus on their core banking tasks.
Build up a super app ecosystem. Banks will have to establish relationships with external providers to co-opt their services.
Undergo digital transformation to overhaul infrastructure and align it with super app requirements. The ability of super apps to deliver a seamless front end depends on a well-integrated back end with open sharing of information. Banks must set up powerful APIs and robust databases to embrace open data architecture.
Upgrade infrastructure. Banking super apps will have to match the USPs of independent super apps. They need advanced algorithms to unlock the value of data.

Banks and financial institutions setting up their new apps will need sizable investments. They would also need a cultural shift to become more customer-focused.

The trend is in favour of super apps. Banks and financial institutions need to be agile and adapt before super apps become a considerable disruption. But they must strike the right balance of joining the super app bandwagon without losing their brand identity. They need to add value independent of the super app and invest in digital experience management for their customers.

Andre Rodrigues

As a software and IT solutions advisor, Andre leads a team of technology consultants for implementing Account-based Marketing strategies to IT customers. In his 30 years of working experience, across the region, Andre has helped numerous clients improve existing business systems and IT infrastructure. This experience has helped Andre secure a unique knowledge and understanding of the challenges faced by these sectors.