Kathryn Petralia is a co-founder of Kabbage, an American Express company.
According to survey data from American Express’s Small Business Recovery Report, nearly a third of small businesses switched financial services providers in 2021. The most common reason for switching was convenience: the new provider offered multiple financial solutions within one company. Secondary reasons followed: Small businesses are switching to providers who streamline operational tasks and offer robust digital banking solutions.
Enter the finance super app. The concept is a decade old (the term was coined in 2010 by BlackBerry founder Mike Lazaridis), but a modern super app in the financial services space promises seamless access to a multitude of tools and services that, when used at the same time, improve the next. When a platform can offer a full suite of solutions necessary to keep a small business running, revised owners will have the opportunity to save time and simplify.
Typically, super apps start with a single specialized service, get approval from a large user base, and then start diversifying and expanding offerings. WeChat was launched as an SMS platform in China in 2011. Now it’s a huge suite of over a million smaller applications that users can use to book tickets, pay bills, apply for a travel visa, and even set up a blind date. Alibaba started with online shopping and now offers investments, loans and its own credit scoring algorithm. Many others in the US started out as point-to-point providers, such as payment processors or small business lenders, but are rapidly expanding to compete with banks and other fintech companies.
In the not too distant past, a small business owner had a relationship with a stationary bank for core financial functions like checking accounts and loans, but still had to cobble together a network of standalone services. They visited four or five separate websites to manage insurance, bills, bills, bookkeeping and whatever. It’s time-consuming and inefficient, even if every company in this narrow niche has excellent service.
For consumers, the advantage of a fintech super app is the much-needed convenience. When bundled deals on an all-in-one interface can handle your direct deposits, stock deals, mortgages, life insurance and credit cards in one place, you are less likely to forget all of these things. Combining all of these features can save a lot of time and money. And mini-apps under one roof will probably go well together: your data from one mini-app can be quickly populated with another, such as directly linking your checking account information to receive a pre-approval letter when shopping for your first home.
Fintech apps have become the face of many banking services, and large corporations are investing accordingly – like American Express’s recent acquisition of my Kabbage business.
With a highly competitive market for specialized fintech offerings and a customer base that yearns for lean solutions, there is a race for the provider of all services. The closure of COVID-19 accelerated the already rapid introduction of independent apps for digital payment, ordering and logistics. But growing platforms mean additional costs and time. Small businesses have proven that they are ready to switch financial services providers for fully digital solutions from a single source.
There may be disadvantages at first. Dependency on a single app – while saving time and money – means that an occasional outage or service interruption can affect multiple business functions. The burden rests on the platform provider to deliver an exceptional experience, to build and maintain your trust and continue to deliver. If you want to switch between platforms, the rights to port financial data from super app to super app will become just as common in the late 1990s as porting cell phone numbers.
The chaos associated with COVID has created a host of new challenges for small businesses. Just keeping the doors open became uncertain, as well as adapting to new protocols, trying to hire new staff and serving customers whose needs are changing just as quickly.
Businesses want tools that make it easier to manage their business, and super apps give them that. These fundamental transformations are driving innovative financial solutions that are designed for convenience.
The demand from small businesses for accessible, customer-friendly digital interfaces will continue to grow. Financial services providers that offer a powerful range of services will continue to attract customers from those who lag behind.