Kathryn Petralia is co-founder of Kabbage, an American Express company.
Nearly one-third of small businesses have changed financial service providers in 2021, according to survey data from American Express’s Small Business Recovery Report. The top-cited reason for switching was convenience: The new provider offered multiple financial solutions within one company. Secondary reasons followed: Small businesses are switching to providers that streamline operations 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 financial services promises seamless access to a variety of tools and services, each one enhancing the next when used simultaneously. If a platform can deliver a full suite of solutions needed to keep a small business humming along, overworked owners will jump at the ability to save time and simplify.
Typically, super apps launch with one specialized service, get buy-in from a large user base, and then begin diversifying and expanding offerings. WeChat debuted in China in 2011 as a text messaging platform. Now it’s a massive suite of over a million smaller applications where users can book tickets, pay bills, request a travel visa, even be set up on a blind date. Alibaba launched with online shopping, and now offers investing, lending, and its own credit-rating algorithm. Many others in the U.S. began as single-solution providers, such as payment processors or small-business lenders, but are rapidly expanding to compete with banks and other fintech firms.
In the not-too-distant past, a small-business owner would have a relationship with a brick-and-mortar bank for core financial functions like checking accounts and loans but would still need to cobble together a network of stand-alone services. They’d go to four or five discrete websites to manage insurance, bill pay, invoicing, bookkeeping and whatever else. It is time-consuming and inefficient, even if each company provides an excellent service in that narrow niche.
For consumers, the advantage of a fintech super app is that much-needed convenience. If bundled offerings on an all-in-one interface can handle your direct deposit, stock trades, mortgage, life insurance and credit cards all in one place, you are less likely to forget about any of those things. Combining all those functions can save a lot of time and money. And mini-apps under the same super umbrella are likely to play well together: Your data from one mini-app can quickly populate another, like directly connecting your checking account data to get a pre-approval letter when shopping for your first home.
Fintech apps have become the face of many banking services, and large companies are making investments accordingly — like the recent acquisition of my company, Kabbage, by American Express.
With a highly competitive market of specialized fintech offerings, and a customer base hungry for streamlined solutions, there’s a race to become the provider of all services. COVID shutdowns accelerated the already-rapid adoption of stand-alone apps for digital payment, ordering and logistics. But proliferating platforms mean added costs and time. Small businesses have proven they’re willing to switch financial service providers for all-digital solutions all under one roof.
Drawbacks may exist at first. Depending on a single app — while it saves time and money — means an occasional outage or service interruption could impact multiple business functions. The burden lies on the platform provider to deliver an exceptional experience, 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 as common as porting cellphone numbers in the late 1990s.
COVID-related chaos has brought a host of new challenges for small businesses. Just keeping the doors open became uncertain, along with adapting to new protocols, trying to hire, and serving customers whose needs are changing just as quickly.
Businesses want tools that make managing their business more convenient, and super apps give them that. These ground-level transformations are driving innovative finance solutions designed with convenience in mind.
Small-business demand for accessible, customer-friendly digital interfaces will only grow. Financial service providers who offer a powerful suite of services will continue to attract customers away from those who are lagging behind.