Indeed, our research and experience suggests that - after nearly a decade of fragmentation and unbundling of services in their lives - consumers are starting to revert towards rebundling. 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.Īn evolution in consumer preferences is also driving the shift towards super apps in the West. In part, the shift towards more all-encompassing apps is being driven by competition. The West is also starting to move in a similar direction, albeit at a much slower pace. In markets - like Indonesia, a key battle ground for the pair - where the majority of the population are unbanked and lack access to basic banking infrastructure, they have come up with novel ways (like using their ride-share drivers as mobile bank tellers) to tap into new customers. Both apps now offer a range of other services from food delivery through to medical advice, and both are competing to help consumers select and purchase financial products. In South East Asia, for example, two super apps have emerged from the leading ride-share platforms, Go-Jek and Grab. It would be easy to dismiss super apps as a China phenomenon, but the reality is they are emerging in almost every market around the world - and they are coming from unconventional places. However, most of the bigger super apps now also have strong relationships with banking arms (WeChat has WePay for payments and WeBank for banking products Alibaba has AliPay and Ant Financial) who are using the super app’s brand reputation and reach to access new customers and build trust in financial services. Currently, the vast majority of these payments are flowing through traditional banking and card issuer infrastructure. Offering payment services within the app may seem fairly innocuous at first a marketplace without a payment mechanism may be doomed from the start. They are building their brand reputations in financial services.Traditional banks, with their siloed data and mainframe technology estates, are struggling to get as good a view of their customers. They are using their data to improve operational processes - like using social media and transactional data to risk-assess loan applicants, and they are using their data to better target financial products to customers, at the exact time they need them. It’s not just that super apps have access to an unprecedented amount of customer data, it’s that they know how to use it to deliver better customer experiences. They are using their vast wealth of data to deliver better services.Much like what happened in the insurance sector with platform plays and aggregators, traditional financial institutions may quickly find they have been relegated to performing the regulated activities while the super apps retain the customer experience and relationship. While (for now) these products are being originated and underwritten by traditional financial institutions, this still means that these institutions are being moved one step further away from their customers. Super apps like WeChat and Alipay offer a range of basic banking, savings and investment products to customers. They are disintermediating banks from their customers.There are three reasons why bankers should take heed of the developments very closely. While the rise of super apps in the East may seem like a fairly peripheral trend to the banking sector, the reality is they have the potential to up-end it.
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