Don’t say App anymore. It’s Super App! 📱

Nowadays, the Super App phenomenon is being discussed in the press and on the radio. Similar to Asia and the United States, France seems to be on the cusp of the Super App for financial services. But will the next decade see the emergence of the Super App model in Europe?

Technology has brought banking innovation to an unprecedented level. And in this computer age, digital banking is continuously growing its footprint in every sector of the economy. Super Apps will extend that range of possibilities and remove any remaining obstacles that allow the banking industry to dominate the everyday lives of companies and individuals. 

The Super App phenomenon 🔥

The term “Super App” (for Super Application) was introduced in 2010 by BlackBerry founder Mike Lazaridis. He defined it as a closed ecosystem with several features used on a daily basis because they are completely integrated and easy to use. This application becomes an operating system that encompasses and orchestrates many features that meet the needs of consumers in different everyday situations, such as booking a trip, ordering a meal, going to the movies, or taking public transportation. 

In 2021, the Super App became prevalent in China. And the best example also comes from the Land of the Red Dragon, in WeChat, an application developed by Tencent. Launched in 2011, it now has more than one billion active users per day. This app started as an instant messaging service similar to WhatsApp but quickly turned into a multifunctional platform that offers a wide range of products and services within one ecosystem.

The most common products and services in Super Apps today are: 

• Payments and financial services 
  • Cashless payments
  • Mobile payments
  • Investment platforms 
  • Insurance
  • Credit and loans
  • QR code payments 
• Retail services 
  • Ticket reservations for events (cinema, theater, sports events)
  • Table reservations and meal orders
  • Hotel reservations 
  • E-Pharmacies (ordering non-prescription drugs)
  • Transportation tickets (train, bus, flights)
  • All e-commerce activities 
• Other features
  • News and media (social media)
  • Calls and messages
  • Job search
  • Entertainment (music, videos)
  • Real estate sales and rentals 
  • Cloud data hosting

The concept is also attractive in Europe. Following its round of financing in 2020, Lydia, a French mobile payment unicorn, is being called the “new French Super App.” From a simple app used to make bank transfers between individuals, it now offers a full range of banking products and services (from paying by QR Code, to viewing one’s bank account, to creating a joint account, to cryptocurrencies, credit, and so on). And as a simple aggregator of its services, Lydia, with the help of experienced software developers, has become agile enough to adapt to digital market trends. The company has what it takes to become the first French and European Super App.

In recent years, Klarna, one of the world’s largest fintech companies, has moved toward a Super App by integrating shopping directly into its mobile app, a further attempt to break away from its original roots as a “Buy Now Pay Later” company.

While these companies are developing offerings that are part of their strategy to become a Super App, they are still far from the Chinese giants. We can anticipate the emergence of a similar model, with a limited number of players providing solutions for most of our needs through partnerships and services and features that are highly optimized and integrated. But to ensure that the model is highly effective, most service providers would need to make their data freely available. Of course, the intensive use of application programming interfaces (APIs) is an integral part of this approach.

Therefore, today’s Super App is an umbrella application that offers a complete ecosystem of services designed to meet users’ everyday needs and which is available on a fully integrated platform or interface. Super Apps typically involve an online marketplace of fully integrated third-party offerings into the ecosystem, use large quantities of data to keep the user engaged, and offer a wide variety of experiences and services.

Why are Super Apps booming? 🚀

Just as applications have become the go-to method of how most users shop and otherwise consume, the smartphone has become the go-to device for performing those daily business and personal tasks, including shopping, banking, attending meetings, watching movies, and so on. These new behaviors have paved the way for Super Apps and market consolidation.

Super Apps offer the advantage of a single platform that users are seeking in order to multitask digitally. Using one Super App is much more convenient for users than managing dozens of separate applications. This is the main reason why Super Apps are gaining ground on applications that serve only one purpose. 

By bringing together a range of services, features, and experiences on a single platform that customers trust and are already using, Super Apps provide a seamless environment that keeps users engaged. In addition, by offering loyalty rewards, users are encouraged to conduct more activity on the Super App to maximize these benefits. 

The European market is slow to adapt the Super App

While Super Apps are popular in Asian countries, they are not as successful in the West. Several causes can be identified.

The maturity of Western economies is an obstacle to the rapid development of Super Apps. Western consumers tend to have long-standing relationships with banks and brands, making it more difficult and unlikely that they would adopt the Super App. However, on the other hand, in Asia, low bank account penetration has contributed to the rise of WeChat. 

While Western consumers’ ingrained loyalty to long-established brands will not help a Super App gain traction, neither will the Western trend of regulating markets to ensure fair competition (e.g., GDPR or even PSD2). This is one of the reasons why the service aggregation business model has not flourished in Asia. 

Another reason focuses on technological advances. The West was exposed to the first computers, then to the emergence of the Internet, followed by the transformation of cell phones into smartphones, all of which led to incremental improvements and countless technological innovations and solutions along the way. In contrast, Asia’s introduction to the Internet came with the smartphone, and with that introduction, a significant portion of the unbanked population began paying for goods and services using mobile applications. The rise of digital in Asia has created a virtuous circle of e-commerce, payments, and lifestyle. 

Payment, the cornerstone of Super Apps 💳

To succeed in Europe, a Super App must be customer-centric, specialize in payments, and cover every aspect of the customer journey. This means not only meeting the needs of consumers but also the companies that serve them (ensuring a good level of service for the network effect). A Super App must also have the flexibility to help these companies keep pace with consumer demand.  

While it may seem obvious, proficiency in payments and proven experience in the payment industry are also real advantages when developing a Super App. While alternative payments are gaining in popularity, the trend is catching on slowly, as confirmed by Capgemini’s World Payments Report 2021. Instant payments and e-money payments will account for more than 25% of non-cash transactions worldwide by 2025, up from 14.5% in 2020. Many payments made via apps still rely on a traditional banking or card infrastructure, which won’t change overnight. With this comes a host of challenges and resource demands around compliance, interoperability, and legacy technology issues that can present significant obstacles to players new to the payments sphere. Payment experts will understand that the path to creating a Super App is a marathon, not a sprint. Capabilities must evolve and grow at the same pace as the market and customer adoption.

This includes a branded experience for every interaction, whether it’s banking, bill payments, shopping, managing utilities, booking vacations, and so on. The payment experience in a Super App is not just about enabling payment but also about establishing a payment system that achieves real results. Integrating authentication, digital identity, and orchestrating money movements reduces issues at the time of the transaction. 

The most popular Super App will be the one with established roots in the payments industry and the technical capability and experience to connect the entire ecosystem! 

A bright future 👀

Super Apps integrate financial services into their platforms in order to provide customers with a seamless experience. In the European market, where no Super App has yet emerged, it is still possible and desirable for banks, financial institutions, and fintech companies to seize the opportunity. Regardless of which players emerge, and when, a clear positioning will be essential to remaining successful in this Super App race! The role of traditional banks in this ecosystem is yet to be defined. In any event, banks and financial institutions will have to agree to play an active role in shaping this ecosystem and then they will have to adopt the most innovative technology. To date, two options are available to financial players: 

Option 1: This is the approach many banks and financial institutions will likely consider. They will offer white-label, back-end and generate new streams, to applications and ecosystems through a "Banking-as-a-Service" solution, making seamless integration possible. The regulatory framework for financial services is so onerous that many Super Apps simply do not want to be licensed, especially in certain markets. This means that Super Apps offering payment, loans, insurance products, and investment platforms will have to create strategic partnerships with banks and fintech companies in their key markets to provide these services. 

This is where Banking-as-a-Service (BaaS) platforms come in. These technology and banking players rely on a state-of-the-art technology stack—a banking platform—to design financial products (checking accounts, payment services, and even loans), and distribute them via APIs, thus facilitating integration into Super Apps. Skaleet, through its Core Banking Platform, supports players that wish to create a BaaS offering or become a financial services contributor for ecosystem orchestrators. 

Option 2: This option will attract the most daring banks or financial institutions, meaning those who are ambitious enough to reinvent their business and adjust their focus in order to meet the challenges of an ecosystem orchestrator, that is, a Super App! Players who choose this path will need to (1) determine what their role will be in financial services or "lifestyle" ecosystem, (2) embrace open data by leveraging the free flow of information between entities, and (3) become a "data player" where the Super App will need to develop data management capabilities such as analytics and machine learning algorithms in order to unlock value from their own and third-party data and launch customer experience and customer journeys. 

This is where our Core Banking Platform solution comes in as a potential solution to build the Super App. Serving as the platform that will orchestrate the Super App, our technology offers an open data architecture, APIs, and a specific orchestration module that allows you to integrate products or services in a maximum of 10 days. Once these modules are integrated, the Super App can change its nature and become a non-financial products and services provider. As a result, traditional financial institutions now have the ability to act quickly and collaborate with technology platforms.