The rise of “super apps” and the disruption of banking as we know it

Akshay Chopra leads the Innovation & Design group for CEMEA, which includes Visa’s innovation center in Dubai and Innovation Studio in Moscow. His team helps clients and partners build new payment experiences in the region.

Often when we run a co-creation "sprint" at Visa, (sprints are programs where teams work with partners to develop prototypes, solutions and roll-out plans within a few weeks) there’s a common ‘quiz’ we give our guests. We show a slide with the mobile home screens of five major Chinese apps, and ask people to identify which of these are ecommerce marketplaces and which are banks apps.

It’s a more difficult task than you may assume. The home screens all the nearly same — lots of ads, promotions, banners, colors, products, cars etc. — basically they look like typical ecommerce mobile sites. I love the look on people’s faces when we tell them that these are all banking apps. China aside, leading banks all over the world are pushing hard to build themselves up as marketplaces and super apps that offer services well beyond banking.

In most cases, these marketplaces simply allow points redemption and purchases from partner merchants. The more ambitious banks are thinking about how they can transform their entire business model towards open listing and exchange, where anyone can sell to their users. For many banks, this is their effort to ensure that they are adding value and being a part of their customer’s daily life beyond just their banking needs.

But this begs an obvious question. Why would a user go to a bank when ecommerce marketplaces exist? Haven’t ecommerce players perfected the art of predicting and serving users’ purchase needs? Are banks too late to the Super app game, or possibly in the wrong game altogether?

As the Innovation & Design group at Visa, we find these questions very intriguing. As a result, we’ve gone deep into many of our markets to study users, merchants, and banks, with the goal of understanding what can make a bank’s mobile experience more than just another cookie-cutter option.
   
Here are a few of our learnings from the various co-creation sprints we’ve run with our bank, merchant and technology partners.

• Yes, there are things that users would prefer to buy from a bank marketplace over an ecommerce site. In our experience, users would indeed prefer getting more ‘serious’ and high-value things from their bank instead of an ecommerce marketplace. Insurance, a home, expensive gadgetry, investments, alternative investments (think art, wine) all fall in this category. If it’s listed on their bank marketplace, they feel it would be more trustworthy. Merchants selling these services also love the trust halo effect. The key consideration for both however, is that…
  
  
• It must be a true marketplace. Unbiased and comprehensive. In our view, even for the products that users would prefer buying from a bank, they would rather go to an ecommerce website if they feel like the range of offerings is limited, the price points aren’t attractive, or biased towards the bank’s own products. Similarly, merchants who want to list on a bank’s marketplace must feel that their offerings will not be sidelined by the bank’s or its strategic partners’ offerings. A true super app needs lots of variety.
  
  
• Bank marketplaces can engage users and merchants in many unique ways. Any good marketplace must reward customers and merchants for loyalty and volume. For a bank marketplace, this could take on whole new dimensions of how they can add value. Think easy installments plans, small merchant loans, more attractive interest rates, rewards built on the bank’s loyalty program, micro investment of unused funds, instantly issuing cards, etc. Such engagement tools are all far easier for a bank marketplace to offer without having to sign complicated agreements with multiple partners (which is what an ecommerce platform would have to). Plus, it cross-sells the bank’s services.
  
  
• Bank marketplaces have a huge differentiator — users’ comfort in their data being used. We’ve seen that many users resent the fact that ecommerce and social media platforms track their habits and capture their data. But with a bank, it’s different — users already entrust their bank with so much sensitive data about themselves, their finances, and their habits. As a result, they tend to expect that anything a bank marketplace offers will be tailored to their needs, using their data, in ways that could be considered intrusive for an ecommerce player. We believe merchants love this too — they know that the bank marketplace can target customers with their products with a lot more insight and personalization. 
      
• Bank marketplaces need to surmount a huge barrier: user experience. The bottom line is that ecommerce sites have conditioned buyers and merchants to a fantastic, intuitive user experience — something at which banks are not traditionally great. Bank sites are still associated with multiple security checks, timeouts, and a mobile-banking-like-ecommerce experience. In this aspect of building a marketplace, banks are better off employing or engaging experts in ecommerce, instead of refitting a banking UX to their marketplace.   

Supporting success for Privat Bank

One of the banks the Visa Innovation & Design team co-created with on building a successful marketplace is Ukraine’s Privat Bank. The largest bank in the country, they bank a substantial proportion of the Ukranian population and always look for ways to do more for their users. They recently launched the Privat24 Market, through which their customers can avail everything from gadgets, tickets, appliances, financing, cards and insurance: a ‘true marketplace’ if based on the parameters discussed above. Privat Bank’s marketplace allows users to buy other banks’ cards and financial products as easily as Privat’s own. The user and merchant experience is also slick and intuitive like an ecommerce site, while building on Privat’s foundational strengths in data and user trust.

As Egor Avetisov, Head of Innovation at PrivatBank states “PrivatBank prides ourselves on being a very innovative player in the market and we are always looking to find more ways to increase customer loyalty. Our objective with this solution was to design a marketplace that serves our customers key needs, provides unbiased options and helps them save. We had a very successful co-creation session with Visa and were able to build, test and launch a solution within just a few weeks. It was a true partnership between Visa and PrivatBank which resulted in a unique end product which is already proving to be very successful in Ukraine.”

In summary, banks have a big opportunity to build a thriving marketplaces that could serve as new revenue streams and help them remain relevant in the digitally-disrupted world. But they need to make sure they build something that’s frictionless, delightful and rewarding for customers and merchants.