How will we conceive of money in the future? My answer is a tale of digital convergence and how we will increasingly begin to spend, save, manage, borrow and share money on one trusted platform: a single superapp on our smartphone.
In the crowded world of paper, plastic, loyalty points, online banking, digibanks and crypto wallets, the concept of completing every monetary transaction with one app may sound farfetched, but this convergence is already happening in Asia and it’s a trend that is taking on the world.
Asia is fully bought into the superapp model of money
I spent much of 2018 travelling around the financial and tech hubs of Asia, and I’ve observed this convergence that is set to shake up banking, commerce and social messaging in one fell swoop. This trend is being driven by tech giants, predominantly from China, that are now offering an ever-increasing range of both financial and non-financial services through a single app. These apps combine communication, search, navigation and commerce into a single platform integrated via a frictionless payments layer, referred to as a superapp.
In China, there are two superapps that rule them all. First there’s the largest fintech in the world, Ant Financial, which originally span out of the ecommerce giant Alibaba and is now valued at $150 billion, having raised 35 per cent of all fintech funding worldwide in 2018. Then there’s Tencent’s social messaging platform WeChat that has more than a billion monthly active users globally.
Now this superapp model is spreading beyond China. Singaporean Grab, the ride-hailing platform that acquired Uber’s Southeast Asian business in 2018, has also been expanding its app’s capabilities into financial services, from payments to lending to insurance.
The beauty of the superapp is seamless customer experience
As these superapps continue to offer a wider range of their own and third-party services, they are reaching hyperscale by creating seamless, integrated, contextualised and efficient experiences for users. And this means the parents of the superapp, the ecommerce, social media and on-demand giants, are beginning to blur the lines between a consumer’s social life, retail life and financial services life, and the implications for incumbent financial institutions is huge.
But is this phenomenon unique to Asia, where there has arguably been a lack of retail and financial services available for digital consumers?
Time for a personal story, which may sound familiar. I rarely make phone calls via a mobile network, I don’t send text messages, I’m a passive Facebook user and I seldom read an online newspaper, let alone pick up a physical newspaper. Yet I speak to friends and family a great deal over the phone, I send multiple messages a day, I receive photos and news of how my friends and family are doing, and I keep up to date on the latest news. I already use one app for all of this and it’s WhatsApp. Already the services from companies I relied upon on a daily basis less than three years ago, I use much less of, if at all.
So how long will it be before the tech giants we already rely on in Europe successfully integrate payments functionality into their offerings? Or will it be the behemoths from the East that take over our social, retail and financial lives? Either way, where do the incumbent banks fit in this model? These new superapps increasingly hold the relationship with the banks’ customers and, most importantly, their data.