The primary intent has been to embed financial offerings in daily and life needs of the customers, provide a frictionless experience, while retaining the control and ownership of customer engagement. This helps financial service providers to make themselves relevant into the daily lives of their customers, increase interaction frequency and make themselves not just a primary bank or insurer but primary service provider to its customers. Obviously ensuring immense recall, insights for personalization and ability to tap key moments of truth. There are other benefits of this model as well, financial services offerings are getting more and more commoditized, the ability to differentiate on core products or pricing is limited. Hence, we are seeing more & more financial institutions leveraged cross industry value proposition to differentiate using value aggregation as a key lever.
This trend has been predominantly observed in the Asian markets with financial service providers like SBI YONO, Alipay, Paytm and others. Increasingly the construct is expected to catch up with the West as well, Pay Pal CEO recently spoke about building the world’s next banking Super App. As financial service providers start building this cross industry super apps, they will start competing with Bigtechs such as WeChat, Grab and Amazons. These Bigtechs have already developed sizeable network effects, a key to success of Super Apps. There is a lot of talk about big tech’s monopolizing Super Apps space with leaving limited ground for financial services to succeed, which essentially means financial services will have to sharpen the focus on customer segment to play to their strengths and thrive.
Financial services providers have two choices, one to embed themselves in ecosystems orchestrated by other non-financial players, the same has been popularized as BaaS-Banking as a service by the jargon brigade. But this may not provide them with the ability to maximize customer mindshare as well as lifetime value. Many financial institutions are experimenting on orchestrating adjacent ecosystems as the alternate option in their pursuit get hold of customer data. The benefits and criticality of developing these propositions are obvious and already stated earlier, but it is not necessary to address the same with a monolithic one size fit all apps. Financial service providers can customize these propositions around multiple dimensions.
For organizations with focus on certain customer segments, then they can build specialized propositions around these segments. We have started to see early offshoots of the customer segment centric ecosystems with banks like Bank of Baroda in India have started with an Agri Ecosystem wherein propositions are built around value chain for the farmers. Small business focussed banks like Tide in UK are providing beyond banking services like accounting, invoice management etc. DBS Bank in Singapore has developed Smart Buddy proposition with a focus on younger students.
We have also seen cross industry value propositions anchored around certain life needs, DBS bank has developed marketplaces around property purchase, auto purchase and travel. These propositions though are not anchored around frequent customer touchpoints but need deep specialization to be effective.
To conclude, Super Apps seem to be the flavour of the season, hence it would be interesting to see the battle between big techs and financial institutions in their race to become primary custodians of the customer & customer data.