Editor’s Note: Financial institutions are sprinting to release new digital services to their customers. Many companies are even considering creating “super apps” as a way to give customers access to a whole suite of services and solutions at once. While this is an exciting and important development in the industry, this level of technological adoption can also open the floodgates to more security threats. Finding a security partner who can help you expand your digital capabilities while keeping security top-of-mind is key to success for banks and credit unions.
Security should be at the top of your list when thinking about your digital transformation roadmap.
Before 2020, mobile apps were already the touchpoint of choice for millions of banking customers worldwide. Events of the past two years have only amplified this trend toward digital banking on the mobile device. To meet consumer demands and stay competitive, financial institutions, neobanks, and fintech companies are increasingly offering more useful services via the mobile channel in their quest to attract and retain banking customers.
Industry leaders are disrupting traditional methods for engaging underserved market niches and retaining current customers with mobile super apps that provide functionality beyond traditional financial services, such as issuing new credit cards and debit cards and opening new bank accounts. When protected with mobile app security technologies, these apps propel brands to new heights by strengthening consumer trust. Banks, in particular, can be especially well positioned to increase adoption of expanded services. Combined with supporting customers quickly, conveniently and securely through mobile financial services apps, this is bringing the customer experience into a new era.
A recent webinar explored the opportunities offered by mobile super apps and how to overcome hesitancy related to fraud and security. After all, consumers trust financial institutions with their money and there’s a strong propensity to trust financial institutions (FIs) with additional services. Financial services providers can move forward confidently and build on this foundation of trust with their customers since proven mobile app security technologies exist to protect against mobile attacks and financial fraud.
What is a financial super app?
The terms “super app” and “financial super app” are still relatively new and being defined within the industry. Participants in the webinar discussed three possible definitions for a financial super app:
- A strategy blending in-house and third-party technologies delivering many products and services: According to Forrester Principal Analyst Peter Wannemacher, one working definition of the term is a business strategy that uses in-house technology and third-party integrations to create a single ecosystem where customers buy and use financial products and services for a range of purposes. “The diversity of products, services, and purposes matters a lot,” Wannemacher says. “Picture a wide, diverse set of products and services available to the customer within that shared ecosystem.”
- A “front door” to many products and services: This is the concept of a digital front door to a range of products and banking services that a customer can buy or use. One brand owns this front door, meaning that brand has the relationship with the customer, but the accessible products and services can be owned by many brands and companies.
- A closed ecosystem of apps that people would use every day: The final definition is one inspired by Mike Lazaridis, founder of Blackberry. In 2010, Lazaridis talked about a closed ecosystem consisting of many apps that consumers can use every day. Essentially, a one-stop shop for services we all need for daily life.
How does a financial super app benefit financial services providers?
Super app technology is highly relevant to financial services, where many new competitors, especially in the digital realm, are entering the market and vying for the business and loyalty of consumers. According to CNBC, “There are already many popular super apps, including China’s WeChat and AliPay, India’s Paytm, Singapore’s Grab, Indonesia’s GoTo, Vietnam’s Zalo and South Korea’s Kakao.”
One of the biggest challenges traditional financial institutions face is forcing too much cognitive load on the consumer. Part of the goal of a financial super app is to make it easier to get financial tasks done.
“When we say cognitive load, we’re talking about the manual workload someone has to do, such as having to type into form fields, click radio buttons, and move through 17 screens. When this can all be done with one screen, that matters,” he says. “Time is a factor here, but there is also an intellectual and emotional load here. How long it takes to get a task done matters.”
The degree of complexity is even higher when it comes to business banking. Forrester found that, on average, business owner-operators have to use more than a dozen different apps, websites, and services every month to manage their business and finances. In this scenario, for example, a bank or other financial services provider could consolidate these tasks into a single experience, saving time for commercial customers while also differentiating their offering in the marketplace.
The world of super apps allows a financial institution to grow their brand, increase adoption, and strengthen customer loyalty by adding more and new products and services for customers to interact with and use. Financial super apps offer the ability for financial institutions to go beyond traditional banking and cross over into a lifestyle platform—but for the most part, banks and other financial institutions don’t have to. They don’t need to establish ride-hailing, taxi or food delivery services. Instead, banks should think about making a single app into the go-to resource for people who need to complete financial tasks. Look at why customers come to your bank now, and build a platform on that.
What to consider when developing a super app strategy
No matter what strategy is considered, when considering a financial super app, it’s critical that financial institutions be willing to explore, measure, iterate and be open to embracing flexibility. The considerations that need to be addressed before developing a super app strategy include:
- What role are you trying to play in consumers’ lives? Start by deciding on your target audience. For example, are you focusing on regionally based consumers? Are you taking more of a lifestyle approach? Additionally, consider what value you want to offer your audience in their digital journey. It’s important to have a clear view and definition of the desired outcomes at every stage of the journey.
- What is your unique value? What do your users perceive as compelling about the value your brand and/or services deliver? How can you authentically give them more of what they want from you? For the Business Development Bank of Canada, which serves entrepreneurs exclusively, François Guerette, Mobile Apps Product Management explains that, “We found that business knowledge doesn’t always reach entrepreneurs at the right time. So, we started thinking [about mobile apps] in a broader context. What can we do to help them accomplish their goals? We started to think about apps giving us an opportunity to touch base more frequently with our customers. But it’s all in context—it’s all about how we can help them manage their business.”
- What is realistically feasible? This entails identifying limitations, such as resources, talent, and technology. What are the biggest hurdles within the business? Is there a lack of brand awareness, data infrastructure, security, etc.?
- What existing partners do you have that you can leverage? What new partners should you seek out?
What’s the best approach for the security of your financial super app?
One of the key things to keep in mind when FIs are looking to add more services to grow their own ecosystem is that it increases the attack surface and adds more potential vulnerabilities. For example, attackers who learn of a new feature an FI will be rolling out may begin strategizing about how to take advantage of that service.
To mitigate these security risks, it’s necessary to work with experienced security partners, particularly experts in mobile super apps. Partners that have a mobile-first mentality are essential since the mobile space is where a vast majority of people prefer to engage with their financial institutions on a daily basis.
At the same time, security needs to be executed in a way that doesn’t impede the user experience. Because mobile apps are unique in that they execute in a potentially hostile environment, mobile app security must be approached differently than security for a web application. That’s why protecting the app on the client-side with mobile app shielding is imperative.
The opportunity for super apps will continue to grow
Innovative FIs are leading the way in providing greater value to consumers and, in turn, creating more valuable channels for revenue. As more financial institutions work to expand the relevant services they offer their users, there are going to be a lot of hybrid variations in the market as organizations become more willing to experiment.
The experimentation will be worth it. By offering mobile apps that go beyond traditional banking, super apps will be able to provide customers with access to financial services as well as third-party services such as cardless fueling, cryptocurrency trading, on-street parking, bus ticket purchasing, and more—without compromising on user convenience.
This article was written by Samuel Bakken from American Banker and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to firstname.lastname@example.org.
Learn how Windstream Enterprise can keep your bank secure and innovative.