As fintechs develop ‘super apps,’ are banks partners or rivals?
More fintechs are developing “super apps,” which are designed to bring together services from new and legacy financial services providers — and in some cases, could replace the need for a separate bank account.
PayPal, for example, is promising its own super app in the third quarter of 2021. “It will be an all-in-one personalized app,” Dan Schulman, PayPal’s president and CEO, said during the company’s earnings call on Wednesday.
Other than PayPal, apps from Curve, Instarem, Revolut and Wise that started with a single service are adding a raft of features such as fast low-cost remittances, bill payments, savings, budgeting and installment loans. While providing some of the services themselves, these fintechs can also provide access in a single location to products from financial services partners.
Because these apps are relatively new, they can offer a fresher interface while using open banking to link to customers’ external bank accounts. And in some cases, the super apps are also able to substitute for a traditional banking relationship.
“In the U.S., super apps encourage consumers to deposit their salaries and stimulus checks directly into their payment accounts, and they all issue debit cards which make the funds accessible and spendable,” said Aite Group Senior Analyst Talie Baker.
“PayPal’s mobile app is intuitive and cool,” Baker said. “It’s so much easier to sign up for a PayPal account than a bank account, and the mobile experience is so much easier than any FI’s mobile app.”
Companies like Square have reported heightened activity from stimulus payments. Square’s Cash App, which began as an interface for a simple email-based P2P payment system, has become a launchpad for additional financial services including a debit card and bitcoin purchasing.
But there are also partnership opportunities, such as Google’s work with Citigroup and Stanford Federal Credit Union on its Plex account within Google Pay.
Baker predicts the user experience for super apps will continue to drive demand for the expanded services the super apps are starting to offer. If the super apps were to offer payments at the point of sale, this could catapult them to greater consumer adoption, Baker said. “This could enable them to become a global WeChat or Alipay.”
There is a trend for remittance and payment services providers to morph into all-in-one apps, according to Ruchika Kohli, U.S., Canada, EU and U.K. consumer head at digital remittance provider Instarem.
“Consumers don’t like having lots of payments and banking apps to log in to, so they want to consolidate,” Kohli said.
Instarem, which is owned by Singapore-based fintech Nium, serves over 100 markets and has 130 million customers, processing $6 billion in transactions annually. The firm has announced plans to move beyond consumer and small-business remittances to become an all-in-one app provider.
Instarem’s first step will be to launch the Amaze debit card that will enable consumers to consolidate all their cards into one payment instrument. It is also developing neobanking services that will be launched in various geographies in the next few years.
While Instarem hasn’t decided what financial services to include in its super app, Kohli said a possibility would be social media payments and a dashboard of users’ linked bank accounts showing holdings in these accounts.
“Our customers are immigrants with bank accounts and properties in their home country and the country they immigrated to; they want to manage their financial life from one place,” she said.
Building a stronger and more engaged client base through a super app is a driver for fintech expansion into new product areas, according to Celent…
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