From app to super-app to personal assistant

In July of this year, KBC bank (the 2nd largest bank in Belgium) surprised many people, including many of us working in the banking industry, with their announcement that they bought the rights to broadcast the highlights of soccer matches in Belgium via their mobile app (a service called "Goal alert").
The days following this announcement the news was filled with experts, some of them categorizing it as a brilliant move, others claiming that KBC should better focus on its core mission.

Independent of whether it is a good or bad strategic decision (the future will tell), it is clearly part of a much larger strategy of KBC to convert their banking app into a super-app (all-in-one app). Today you can already buy mobility tickets and cinema tickets and use other third-party services (like Monizze, eBox, PayPal…​) within the KBC app. Furthermore, end of last year, KBC announced opening up their app also to non-customers allowing them to also use these third-party services in the KBC app (as a customer acquisition tool for traditional banking services and to create a larger user base for its third-party services to monetize).

A similar story at Belfius (the 3rd largest bank in Belgium), which also offers third-party services in its app and furthermore recently announced a large partnership with Proximus (the number 1 Belgian telecom provider). The aim here is also to offer a joint app allowing to offer banking, telco and other services in 1 super-app.

If 2 of the tier-1 banks in Belgium are pursuing this strategy, there must be a reason. Research has showed that mobile users spend 87% of their time on their smartphone in apps. On average these users have 35 apps installed on their smartphone, but only 15 are effectively used (i.e. used at least once a month) and 80% of the time spent in apps is spent in only 5 apps (with the apps of Google, Facebook and Apple not surprisingly taking the lead here).
Taking these statistics into consideration it is clear that being part of these 5 apps gives a very strong customer relationship and an enormous competitive advantage.

The strategy of KBC and Belfius is also not so surprising, when looking abroad and looking at the evolutions in the tech sector. The concept of a super-app, i.e. an all-in-one experience to access many different services (like social networking, eCommerce, financial services…​), is not new and provides many advantages like:

• Saving phone space

• Avoid installing a new app for every service

• Reuse of authentication, payment and signing services

• Provide end-to-end user journey experiences, i.e. combining the products and services of different third parties

• A super-app can impose certain quality standards to its integrated services, with regards to security, usability, support…​, giving a higher confidence to users

• Enormous amounts of user data can be collected, offering even more targeted products and services (although in Europe with GDPR regulations, this will be less straight forward then in South-East Asia)

• Allow third-party services to get immediate access to an enormous customer base (ecosystem)

The most advanced example of a super-app is definitely China’s WeChat(from Tencent), which combines Twitter, WhatsApp, Instagram, PayPal, Tinder…​ in 1 app. With over a billion monthly active users, an average usage by users of 66 minutes per day, 9 out 10 users using the app daily and a usage by over 70% of the Chinese population, this app manages almost every aspect of daily life in China. Not to mention that WeChat Pay can be used to pay in almost every shop (both small and large) in China (by scanning a QR code).

Other examples, which might be less known in Europe, but which are just as successful are:

• Alipay: the payment solution affiliated with China’s e-commerce giant Alibaba. This all-in-one platform, with over 200 million daily active users, provides also different services, like shopping, transferring money, managing your finances, reserving and recommending restaurants…​

• Grab: Singapore-based tech company, which started as a ride-hailing service but also evolved into a super-app. Mainly present in the Philippines, Singapore, Thailand, Cambodia, Malaysia, Myanmar, Indonesia and Vietnam

• Go-Jek: Indonesian tech company, which started also as a ride-hailing service and expanded to a full super-app present in multiple countries like Indonesia, Vietnam, Singapore, Thailand, and Philippines.

• Line: the super-app mostly used in Japan

• KakaoTalk: the super-app mostly used in South-Korea

While this concept of super-apps is already well established in South-East Asia, the rest of the world still struggles with multiple apps. In the last years multiple initiatives are taken by Silicon Valley businesses to also offer more services and evolve to super-apps, e.g.

• Uber introducing also services like Uber Eats, shared bikes, banking services (like loans and insurances to their bikers)…​

• Facebook doing its first attempts to integrate their different apps (i.e. Facebook, Instagram, Messenger and WhatsApp) into 1 super-app and also providing payment services (first with Libra, afterwards with Facebook Pay)

• Amazon offering already different types of services, like video and music streaming, financial services…​ and also planning to further integrate these different experiences together

• …​

Clearly the opportunities for big tech are enormous. While Google and Facebook today get the majority of their revenue from advertisement, via a super-app they could get enormous additional revenues from commissions on every transaction passing via their super-app. If we look today at WeChat, only 17% of their revenues comes from advertisement, compared to almost 90% for Facebook.

While these evolutions unfold, it is likely that the market will be divided across maximum 2 or 3 international super-apps (with Google, Facebook, Amazon and Apple clearly best positioned to win this fight in Europe), unless competition laws would prohibit this evolution. However next to these international super-apps, there will be place for more locally oriented super-apps (probably 1 or 2 per country/region), where banks (like KBC and Belfius) can definitely play a role, given their existing large customer base, access to financial services, good knowledge of local habits and preferences and already good expertise in sophisticated apps.

Nonetheless super-apps will not be end station. The next step obviously will be an AI-based voice-controlled (or via chat-bot) personal assistant, which will manage every aspect of your life and avoid you to have any interaction with apps and super-apps.
Clearly the big tech firms, i.e. Apple with Siri, Google with Google Assistant and Amazon with Alexa, are best positioned to take this market. But also here there will likely be room for a local complement. KBC has also taken a first step here with its AI-based chatbot Kate, offering today only basic financial support, but which is expected to evolve to a full concierge service.

In such a world dominated by a few super-apps and/or personal assistants, banks will need to prove their value for the ecosystem.
As the product/service offered by them will be part of an overall customer journey, the onboarding/acquisition process will need to become much more frictionless, automated and personalized.

Furthermore, banks will need to rethink their monetization and business strategy. Clearly banks can choose between 3 strategies:

• Become a super-app themselves (most likely a local complementary super-app as indicated above). Clearly this strategy can give the highest gains, but is also the riskiest, as enormous investments need to be done to build out the user base and integrate different third-party services. Furthermore, banks pursuing this strategy will need to evolve to an "Open Architecture" (in order to keep credibility of a super-app), where for certain cases also products and services of competitors should be offered to the user.

• Become a good front-office player in an international super-app, i.e. instead of bringing prospects and customers to its own channels (e.g. its own app), the bank will do all its sales and servicing via plugins (such as APIs, widgets, iFrames…​) integrated in super-apps. These banks should specialize in distribution and offering personalized, well differentiated products within end-to-end user journeys.

• Become a back-office enabler (regulated infrastructure), which will typically provide back-end banking services like account management, KYC, AML, payment infrastructure…​ for banks with the 1st or 2nd business strategy. In this strategy the bank will evolve to a "Platform as a Service" to other banks.

Currently most banks still try to have full control over a customer relationship, i.e. all sales and servicing done via its own channels and also manage all back-end services themselves. Most likely in the future a larger specialization will be required in order to stay profitable and competitive. It will be interesting to see which strategy each European bank will choose.