Fintech firms are banking on the super app strategy to drive business growth

Print

Email

Consumers are spending an increasing amount of time on their smartphone devices. From socializing to buying grocery, entertainment, and shopping, everything is getting done through mobile phones. To make consumers stick to the brand and increase consumer loyalty, businesses are introducing new services which offer more value to users. WeChat, in China, is a prime example of this strategy. The platform which started as a social messaging app has expanded into new services to drive its revenue growth and build a complete ecosystem for its users, thereby creating brand loyalty.

Notably, many businesses have opted for a super app strategy to drive their business growth in the past, and the trend is further continuing in 2022, as brands look to drive more revenue per customer by introducing new services. For instance,

• In October 2022, Revolut, one of the leading neo-banks and prepaid card providers in Europe, announced the launch of a new service called Shops for its users in Ireland. Notably, Shops is part of the firm's strategy to build a super app, through which it can drive incremental revenue per user. The challenger bank, which provides prepaid card services globally, has forayed into the e-commerce sector through the launch of Shops.

Using the service, Irish users can shop for products from over 1,000 brands without leaving the Revolut mobile app. Some of the leading retailers that have partnered with Revolut include IKEA, Harvey Norman, JD Sports, and TK Maxx, among several others.

To make the new service attractive for its 1.9 million users in Ireland, Revolut is also offering an instant 3% cash back on every purchase made through its mobile app as long as the users buy products using the Revolut prepaid card. At present, there are no restrictions on the amount of cashback received. In addition to the 3% cashback, the firm is also offering discounts on products from various brands. Notably, Irish users can also opt for the recently launched buy now pay later service by Revolut at checkout.

• As part of its super app strategy, the firm rolled out its Pay Later service for a select group of users in Ireland in June 2022. Notably, the BNPL option allows users to fund their purchases up to €499 and spread the cost over three-monthly installments. However, unlike the zero-fee, zero-interest BNPL service offered by many players, Revolut charges a 1.65% fee per purchase, which is repaid during the final two installments.

The BNPL payment method is also integrated within the Revolut app, thereby allowing consumers to choose the suitable payment method at the time of checkout. Users can select the Pay Later option through any of their Revolut prepaid cards, including the Revolut Disposable Virtual Card.

• Along with Shops, the firm also introduced a holiday home rental service into its mobile app in October 2022. The feature allows users to book holiday homes across the world and receive cashback. The launch of the holiday home rental service is part of the firm's accommodation booking service, Revolut Stays, which has provided over £1.5 million in cash back, as of October 2022. Currently, the Revolut Stays service is available to users in the United Kingdom and Europe.

The launch of all these services means that Revolut is creating an ecosystem where users receive everything at the same place, thereby offering more value to the users and driving additional revenue for the firm. As of October 2022, the fintech firm has over 20 million users globally and is processing over 250 million transactions a month.

In Ireland, where the firm has 1.9 million users, approximately 40% of the total population has a Revolut account. Having achieved such as large penetration rate in the country is probably the reason why Revolut launched its Shops service initially in Ireland. If the service gains gain traction and generate revenue for Revolut, the firm is expected to roll out the shopping capabilities for its global user base over the next three to four years.

Many fintech firms have been eyeing the super app strategy to drive incremental revenue per user. Klarna, one of the leading global players in the BNPL category, is another prime example of a firm that is banking on the super app play. For instance,

• Over the last few quarters, Klarna has continued to expand the scope of its supper app strategy. From launching new features which enable users to keep track of their online purchases to introducing a search tool, Klarna is betting big on the super app play to drive revenue growth. In October 2022, the firm also launched a price comparison tool, thereby allowing users to find the products more easily and at the best prices.

One of the big drivers for Klarna to adopt a super app strategy is the potential for increased market share. With BNPL firms facing strong headwinds amid rising inflation, interest rates, and cost of living, Klarna is betting on offering more services, thereby giving its platform a way to have alternate revenue streams. Notably, offering more and more services on the platform also makes Klarna a lucrative partner for retailers and advertisers.

From the short to medium-term perspective, PayNXT360 expects more fintech firms to adopt a super app strategy. Furthermore, both Revolut and Klarna are expected to further enhance their product and service offerings by launching more value-added services for their users globally.

To know more and gain a deeper understanding of the global prepaid card market, click here.