Super apps: a potential disruptor for modern banking

By William Girling
A report by KPMG postulated that conglomerated service apps or ‘super apps’ could be one of the most disruptive influences in the finance sector...

A report by KPMG postulated that conglomerated service apps or ‘super apps’ could be one of the most disruptive influences in the finance sector.

Although less common in Western countries, consumers in the Asian market have quickly adapted to using a single portal to access a suite of popular services, including messaging, social media, e-commerce, ride-hailing and more. 

The integration of these functions is such, states KPMG, that “it is not unusual for a WeChat user in China to set up a date with a friend via instant messaging, make dinner reservations, book movie tickets, order a taxi and pay for every transaction along the way, all using one single app.”

A threat to banks

Despite the undoubted convenience for service users, there are, in fact, distinct disadvantages presented by super apps to banks and the finance sector. Namely:

  1. Banks are one step further removed from their customers. KPMG posits that banks may find their activities become purely perfunctory whilst super apps claim customer loyalty through experiential incentives.
  2. Following on from the first point, banks will have even less data on their customers than ever before; their siloed data infrastructure becomes vaguer.
  3. Owing to enhanced brand reputation and influence, super apps may gain greater financial and payment leverage over traditional authorities like banks.

Although it concedes that some may view the development of super apps to be primarily a China-based issue, KPMG emphasises that the same market conditions which led to their development in Asia could easily impact the West too:

“In part, the shift towards more all-encompassing apps is being driven by competition. Companies in almost every industry that do not want to become disintermediated by a super app are thinking about how they can become the West’s answer to WeChat and Alipay.”

Preparing for the change

Viewing the global transition to super apps to be a question of ‘when’ and not ‘if’, KPMG recommends that bank executives focus on four core areas of development:

  1. Develop partner ecosystems: Citing the end of industries based on verticals and giving ground to a market differentiated by the consumer’s experience, KPMG states that a bank’s long-term value will be determined by relationships it builds.
  2. Embrace open data: Super apps thrive on the basis that they have a free flow of information between entities. To compete, banks will need to explore open data architecture and APIs (Application Programming Interfaces) too.
  3. Unlocking the value of data: The importance of analytics algorithms to increase the value of information cannot be overstated.
  4. Establish a vision: With tech infrastructure accelerating unprecedentedly fast, banks could find themselves made redundant without carving a particular niche. Establishing what part the organisation wants to play in the new era of finance should be decidedly swiftly.  

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