Super Apps Aren’t Going To Make It In The United States

Fintech Super Apps Aren’t Going To Make It In America Ron Shevlin Senior Contributor Opinions expressed by Forbes Contributors are their own. Observations from the Fintech Snark Tank New! Follow this author to improve your content experience. Got it! Aug 1, 2022, 08:00am EDT | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin CHINA – 2020/08/11: In this photo illustration the Chinese multi-purpose messaging social media and .

. . [+] mobile payment app developed by Tencent, WeChat logo is seen on an Android mobile device with United States of America flag in the background.

(Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images OBSERVATIONS FROM THE FINTECH SNARK TANK The “super apps” concept is getting a lot of press these days. PYMNTS. com recently reported : “Most fintech firms that started out a decade ago came to market with a single, easy-to-use financial product that customers loved.

Over time, however, those services have expanded with additional products and services as firms sought to grow their businesses, evolving into what is known today as super apps. ” And in a report titled Super Apps in Banking , Insider Intelligence asserted: “[US] consumers’ growing time spent with mobile and their overwhelming choice of products and providers are driving demand for rebundling in financial services. Super apps are emerging as the solution to meet this demand and improve the digital customer experience.

Banks must start deciding today how to engage in the super apps trend to stay relevant to consumers. ” Both of these views are misguided, driven by an incorrect definition of super apps and a misconception about consumer behavior and attitudes. What’s a Super App? MORE FOR YOU Shares Of Money-Transfer Fintech Remitly Rise 13% In IPO, Valuing It At $7.

8 Billion CDP – Environmental Disclosure Platform Probing The E in ESG Digital Identity Should Be A Big Business For Banks While hardly a household term in the US—yet—the “super app” concept is often misused and misunderstood. Just selling a lot of different types of products and services on a mobile app does not make an app a super app. Super apps are ecosystems.

They’re enclosed experiences that make it easy to accomplish a wide variety of tasks—as long as the tasks occur within the walled garden. To date, super apps don’t really exist in the US—but they’re dominant in China. A screen shot of one of the leading super apps, WeChat, demonstrates the breadth of services integrated into a single app.

WeChat super app Source: Visual Capitalist The following chart shows a comparison of services included in three of Asia’s most popular super apps. Super apps comparison Source: TechInAsia Super Apps Have Unique Technical Aspects The super app term is often misused in the US because the technical aspects of a super app are misunderstood. Super apps rely on mini programs—lightweight apps that run inside another app.

They don’t need to be downloaded or upgraded through app stores. They make it possible for one app to perform the service of many apps. Wechat mini programs Source: Wechat Wiki There are a number of benefits to mini programs including: Speed.

Mini programs are cached on the phone, making it faster to load than a mobile app. User experience. Updates aren’t required with mini programs as the latest version automatically loaded.

Integration. Mini programs are tightly integrated: >60 entry points, directly shareable in chats, deep linking to specific subpages. Cost.

Mini programs typically cost 20% to 50% of the development cost of an app, thanks, in part, to a shorter time-to-release. Super apps took hold in Asia because Asian consumers owned under-powered smartphones that weren’t conducive to managing 40 to 50 separate apps. The majority of smartphones in the US has plenty of horsepower, however.

Americans Don’t Need Super Apps Insider Intelligence claims Americans “grappling with provider and product choice overload are hankering for service rebundling, driving up demand for super apps. ” Not so. It’s not uncommon for a Millennial couple in the US to have 25 to 40 financial relationships, encompassing their financial accounts and the tools they use to manage those accounts.

Americans’ financial relationships Source: Cornerstone Advisors The “hankering for service rebundling” isn’t coming from consumers—it’s coming from providers like PayPal and other fintechs who see their narrow product line offerings as barriers to growth. Americans have never wanted a one-stop shop in financial services or retail and don’t want one now. The “walled garden” approach is too limiting for most US consumers.

Super Apps Aren’t Coming to the US. . .

According to Insider Intelligence, the super app model in Asia took off thanks to two factors: 1) unbanked populations jumping to mobile payments, and 2) strict app marketplace regulations. As the report points out: “The Google Play Store isn’t available in China, Apple is limited in what it can include on its App Store, and even Huawei’s AppGallery lacks many major apps. To plug the gaps, apps like WeChat and Alipay allowed third-party developers to integrate mini-programs for other services, transforming them into super apps.

” Neither of these factors is present in the US. What is present in the US, however, are data privacy and security concerns. Although the US has yet to take the regulatory actions that other countries have, those days appear to be nearing, as one US regulator is looking into Apple’s use of consumer data regarding its announced buy now, pay later service.

Another factor present in the US is the economic structure of the country’s major industries, many of which are dominated by oligopolies—three to four really large firms that control 60% to 80% (or more) of an industry’s market share. A super app wannabe will meet resistance from the oligopolies who may see themselves as potential super app creators. .

. . Except From Maybe Walmart.

. . Walmart may be the exception in the US.

Walmart’s prospects for a super app in the US are legit because the retailer has an: Underserved customer base. Practically everyone in the US shops at Walmart at some point, but the company’s core segment—non-urban, low- to middle-income consumers—is often underserved by the oligopolies dominating many industries. Ecosystem.

Walmart has decades of experience of building an integrated, cross-industry supply chain. With the exception of Amazon, who else can make that claim? This last point is why a lot of the super app talk (from a US perspective) is nonsense. A super app is an integrated ecosystem—not just a variety of products.

What about Apple? The Big Tech firms has the resources, user base, and product variety with which to build a super app, but its walled garden approach will prove too constraining for most Americans. . .

. But Definitely Not From Banks Insider Intelligence believes that “banks must decide how, not if, to plunge into super apps. ” Maybe for banks in other parts of the world—but not in the US.

There are maybe five banks in the US with the resources to even think about building a super app (the four banks with $1 trillion in assets and Capital One). But where’s the consumer interest in getting ride sharing services, food delivery, travel booking, and other services from a bank? If anything, Americans are interested in the opposite —they want financial services from non-financial services firms like Home Depot, Playstation, and Coach. Follow me on Twitter or LinkedIn .

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