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FINTECH SUPER APPS: THE NEXT FRONTIER FOR EUROPEAN STARTUPS?

by Elena Ivanova

What if you no longer have to switch between 7 apps as there is a one-stop portal for most of your needs…

And you can set up a date with a friend, book theater tickets, and make dinner reservations within a single app. It would not be an exaggeration if we claim that nowadays there is an app for just about anything. 

The average phone has around 80 apps installed, more than 40 out of which are never used. Another 24 are used only monthly and only 5 apps – WhatsApp, TikTok, Facebook, Instagram, and Youtube are used by people worldwide every day. But soon the need for having various apps may be a thing of the past. There has been a rising trend for companies around the world to start expanding beyond their core services and rolling out additional offerings with the goal to create all-in-one digital spaces that are sticky to consumers. These types of spaces are called super apps. 

A super app…sounds crazy trendy, but what exactly does it mean? Super apps combine several services into one app intending to allow the user to conduct all of their daily activities, and even business tasks, through a single interface. The concept for a super app originated from China and the WeChat app, which has built a mobile ecosystem of over 2 000 000 services from 200 different categories using an app-within-the-app approach. 

The functionalities of such apps can include anything from social networking and shopping to transportation, logistics, and banking. For instance, some of the most sophisticated ones so far, the Chinese WeChat and Alipay, combine online messaging, social media, marketplaces, and services. By doing so, these apps are bundled in one of the value propositions of WhatsApp, Facebook, eBay, and Uber.

Even though super apps are very complex to be put together as a single product, it is all done with the single goal of making it convenient for the users. And making it more incentivizing for them to stay in the app, of course. It also seems like users love it as the average worth of annual transactions made on the WeChat platform amount to $250B. 

According to data from Statista, only in the period July-September 2021, the European consumer spending on mobile apps from the Apple App Store and Google Play Store combined amounted to over $4.5B. And it marked a more than 20% increase compared to the same period in 2020. This all leads to the thinking that the European consumers are increasingly becoming mobile-first. Hence, other reasons for app-based businesses to consider jumping on the super app wagon. 

What’s the point in becoming the “The app to rule them all”

More than a decade ago, Apple coined the catchy slogan “there’s an app for that” and it proved to be absolutely right. Nowadays, consumers use banking apps to check their balances and pay bills, personal finances apps to manage their money, as well as payment apps and digital wallets to digitally store their cash. Not to mention the use of ride-hailing apps, delivering and booking apps for eating out. 

Not so long ago, the main thinking was that the availability of more apps would make users “stickier” to their mobile devices. But this is not exactly how things played out as consumers are actually prone to downloading tens and hundreds of apps. Instead, they only need 5 or 6 and spend around 90% of their screen time inside these apps. 

That’s why the idea of creating robust apps with open ecosystems was born.  And thus allowing others to develop apps that work inside the environment of those powerful apps. It is why WeChat opened its ecosystem in 2017 for developers to populate it with mini-programs. Even though Amazon does not quite fall within the super app label it utilizes the super app strategy. The global giant creates an entire ecosystem around e-commerce that now includes Alexa, Amazon Prime, medical prescriptions and supplies, designer fashions, meal kits, groceries from Whole Foods, and more. No surprise that consumers are spending most of their online commerce experience in the Amazon/Alexa ecosystem. 

Explore Super Apps trends

The reason why app-based companies are interested in becoming that everyday app, which users can’t get enough is simple – monetization. The opportunity for super apps is to find out new ways to engage the users who are already part of their ecosystem by introducing new mini-programs and features that make the app even cooler. 

Of course, with big wins, come big threats. The fact that super apps combine so many different functionalities into one means that they collect immense amounts of data. With such large databases, they become vulnerable to security and privacy breaches as well as fraud protection. 

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Positioning and types of super apps

To make everything clearer, let’s look at the journey that applications went through before becoming super apps. First, the most simple form is the standalone app like Spotify, which is simply a product with one main function. Then there is the app suite, which combines several applications with similar or complementary functionalities that can be integrated with each other under the ownership of one company. Here, a case in point is Microsoft Suite. 

Then moving one step further, the super app is a single application with various functionalities that are usually facilitated by a native payment system. Sometimes super apps have an additional mini-programs layer through which they allow third parties to integrate their products in the native super app ecosystem. 

Going into more detail, super apps fall within two main categories: ecosystems and getaways. Ecosystems super apps are community-oriented and are only facilitated by a payment system or some other form of fintech solution as a means to an end. An example of such an app is the Chinese WeChat, which allows users to message each other, order taxis, and pay bills. On the other hand, getaway super apps are mainly fintech-focused. Usually, they provide users with a mobile wallet that is integrated across various partner sites and can be used for booking hotel rooms, plane tickets, and shopping. 

What’s in for users and businesses: the value of super apps?

To users:

 

The benefits for users are quite obvious and they are mainly connected to increased convenience. Super apps allow customers to do everything from one single interface, which means that all of their data is stored. Thus, they don’t have to re-enter their data and financial information every time they make a purchase, order food delivery, or pay for groceries. 

To businesses:

 

For starters, the volume of products and data that flows through super apps serves as a basis for building highly personalized financial, services, and trading ecosystems around every user. These applications not only have access to large amounts of data but also focus on using insights to improve customer experiences and operational processes. For example, by diving into transactional data and social media analytics, these apps are able to tailor their banking services to each user and conduct risk analysis for loan applicants.

Artificial Intelligence and predictive analytics can combine this information with the user’s financial status, social environment, behavioral patterns, geolocation data, and contextual analysis to deliver personalized services and hyper-relevant product offerings.

In addition, even though one might think that the development of a super app requires a huge initial investment, it does not. Development and financial costs are actually low because most of the mini-applications within super apps are developed through API integration with third parties. 

You might wonder why any app developer wants to integrate its product into the ecosystem of a super app instead of just launching its own separate app. The reason is a faster and less risky product launch as super apps have a big audience to promote to. 

One of the key business advantages of super apps is related to their revenue models, which are usually commission-based and the opportunities for monetization of their existing user base. Super apps generate the biggest part of their revenue from commissions by charging merchants or end-users on every transaction that passes via the super app. 

Super steps for super apps and key learnings from successful players

Is there a proper way to build a product roadmap for a super app? An analysis by Akshay Chopra, Visa’s VP Innovation and Design, EMEA, shows that the most successful super apps have three things in common.  These elements are a large user base, technical expertise in building apps with optimal user experience,  and high levels of trust by users. Here are some proven key learnings and super steps for the successful development of an app into a super app.

It is essential to be fully aware of the tech readiness of people and test whether there is a user segment that is willing to trust you with their data and money. Often innovation is killed because businesses wait for a large customer base to show interest in adopting next-generation solutions. While in fact, to get the innovation wheel rolling, super apps should concentrate on the niche segment of tech-oriented consumers who are always ready to try out new services. 

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In addition, to make a super app a desired one-stop-shop solution, businesses should keep in mind the importance of localization. Users would only be happy if they access the food, travel, health, and entertainment services, which are specific for their region or city. To make such a thing possible, super apps need to pay extra attention to forming partnerships.

Here, it’s worth mentioning some additional considerations which are focused on the differences between the EU and US markets and the Chinese market where super apps were successfully scaled. First, unlike the business and policy environment in China, the market conditions in Europe stimulate market competitiveness and are regulated with strict antitrust laws. This means that instead of creating an ecosystem that combines functionalities and services of multiple parties, EU companies with aspirations to become super apps would have to develop everything in-house. Moreover, Amazon, Google, and Facebook have already gained a dominant position and it would be extremely difficult for any newcomer to contest with them.

Who are the European fintech super app innovators?

 Due to the market specificities outlined above, the West still hasn’t witnessed the emergence of a super app. There are, however, some incumbent players that are well-positioned within their ecosystems and have already moved towards expanding their offerings with complementary services. 

The UK fintech giant Revolut, for example, recently introduced a new feature that allows its users to book accommodation in addition to storing money and trading shares and cryptocurrencies. The Swedish Klarna is pursuing a similar strategy: the fintech company has been making investments and acquisitions of tens of smaller tech businesses in order to build an ecosystem of services around its main offering. It is slowly moving towards a shopping super app by acquiring businesses developing pre-purchase solutions (personalized shopping cart, social shopping, retail marketing, and discount browser extension), during purchase solutions (risk management, P2P apps) as well as post-purchase solutions (price match refunds). 

Another European company that appears to have super app aspirations is the Estonian unicorn Bolt (formerly Taxify), which offers ride-hailing, electric scooters, food delivery, and car-sharing services. A couple of thousand kilometers south of Estonia, the Ukrainian team behind Privat24 has also already added unique services on top of its payment, saving, and lending financial services. These include the purchase of tickets and pay for fares on public transport, as well as registration of health and travel insurance policies. 

It’s also worth mentioning that the R&D team of Grab, one of the leading super apps in Asia that offers everyday services to over 670 million people, is located in the the Cluj-Napoca region in Romania. 


Company on focus: Rilla

In order to find out what it is like to develop a fintech super app in the CEE region, The Recursive team reached out to Sonya Bonova, co-founder and CEO of Rilla, a mobile application for personal finance management. Rilla is a digital alternative to traditional banking services that allows its users to easily manage their money via the Rilla mobile app. The startup is part of the third season of the Visa Innovation Program for SEE fintech innovators that is managed by one of the leading early-stage venture capital funds in the SEE, Eleven Ventures.

What is the story behind the startup? How did you gather such an experienced team?

Rilla started off as an entrepreneurial project more than 2 years ago when we formed a small team of enthusiastic, senior experts who at that time were also acting in their main business domains in the non-banking financial holding standing behind Rilla, Management Financial Group (MFG). As the project was gaining its own traction, it became more sensible for us to separate as a team that would be 100% dedicated to Rilla. 

The team behind Rilla, coming with years of experience in the banking and financial services sector, has always believed that customers have been deprived of digital alternatives for full banking services. That is why ever since the beginning, our ambition was to develop a product that would allow customers of banking services to digitally do everything that they can do in the physical banking space. Moreover, in Rilla, we are passionate to offer a bunch of the most used lifestyle services to further help our customers, making their life easier by enabling them to do all they need to do through a simple mobile interface.

What is the biggest problem Rilla is solving for its customers?

The problem that we have observed is that providers of digital financial services usually offer fragmented solutions. It is very rare for a fintech startup to offer an entirely digital and exhaustive portfolio of financial services. So we decided to tackle this market opportunity. To differentiate ourselves from the competition, we wanted to add more value to our product and focus on digital lending services on top of the more widespread digital payment and transfer services. Moreover, the Rilla app is customized for every user as it tailors its offering based on smart analytics. 

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What are the benefits that Rilla is offering its customers?

First, Rilla offers its users an easy and safe registration for which they only need an ID card and a selfie to get their free account with Bulgarian IBAN. In addition, we have no unjustified fees – no account-opening fee, maintenance, or closing fee. What this means is that users can transfer money instantly and completely free of charge to other Rilla users.

Besides making transfers within the app, users can transfer money online to any bank account in Bulgaria and track every movement in their account on their phones. Paying your utility bills in a second is another new and friendly functionality that we launched at the end of 2021.

At what stage of development are you in 2022 and what are your short and long-term plans?

Currently, the team of Rilla comprises 27 people and we expect to hire more talent in 2022. In the long term, we have two main goals and they are both related to reinforcing our value proposition as a fintech super app. We plan to upgrade our offering with new features which are not entirely financial but would rather add value to their everyday lifestyle. We also aim to quickly expand beyond the local market. We have built Rilla with a scalability-focused approach and we have already started researching potential new markets for entry. 

Can you share some examples of how the Visa Innovation Program helped you develop Rilla?

Visa and the mentors of the Visa Innovation Program helped us find an initial focus around which we can build on later stages or our so-called beachhead market. This was the market for lending products addressing the needs of the credit persona profile. We were guided on the right track to start off with a targeted product that solves a specific need instead of spreading our efforts and achieving less. The Program also allowed us to meet with a wide network of potential partners and investors. Thanks to the Program, we are currently negotiating a great Loyalty program for our project offered by another startup in the Visa Program, and we are grateful to see a really beneficial collaboration between our teams.

What is happening in the world of super apps today? And what comes next?

 

A report by KPMG on the disruptive power of super apps states that “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”. We can’t really say whether this will probably turn true or not. But at the same time, one thing is for sure – during the COVID-19 pandemic, we became more aware of the fragmentation in our digital worlds. That is why the super app trend will most likely continue to gain momentum as consumers are demanding more seamless digital experiences.

Researchers find it hard to predict from which industry the first regional super app will come. Mobile networks, financial institutions, and messaging services appear to be well placed and possess some inherent advantages for becoming super apps. 

Rather than replicating the all-in model of WeChat, the next generation of super apps could instead offer services that are focused around a specific niche. Such could be high trust apps for banking and financial services, or practical lifestyle super apps for grocery shopping, food deliveries, rideshare, and so on. Another potential niche would be entertainment-focused super apps that include social, chat, and marketplace features.

Many leading global retailers have already partnered with existing super app players or have even begun to create their own iterations to boost their digital growth at home. For example, India’s Flipkart, which is now owned by Walmart, is building its own super app.

In addition, if super apps emerge across Europe, they would most likely shift the power away from mobile devices and consumers would not be so much obsessed with the model of the device they have.