Why insurers should keep an eye on "super apps"

The trend is toward second apps. This is the impression that comes to mind when you take a close look at the apps for financial and insurance services in the Google and Apple app stores. Some companies offer a potpourri of apps whose differences only become apparent to users at second glance. Insurers are apparently following Apple's motto, "There's an app for that," which emphasizes the versatility of the various solutions.

The countermovement: the "Super Apps"

The situation is different in the Asian region. In China, two apps dominate users' smartphones, which serve as a blueprint for a category of software known as "super apps." WeChat and Alipay are the two apps without which less and less is able to take place in public life.
It is a part of the everyday life of Chinese users to use the WeChat messenger feature to make appointments with friends, to reserve a table in a restaurant, then to call a cab – and to use the integrated payment feature to pay for everything digitally, directly in the app. The QR codes for Alipay and WeChat are now part of the cityscape. With these apps, users can sometimes even save themselves the trip to the office of a public authority and manage their affairs directly and digitally.

A trend is emerging in other circles

As the report by the two industry specialists Adjust and Apptopia reveals, super apps are among the top trends in the mobile sector. Although this trend is particularly strong in Asia, other regions are catching up. As an example, the report also mentions the Fintech app Revolut, which is about to become a super app. Facebook is also said to have similar ambitions and is gradually adding more features to its messengers, most recently with a direct shopping option in WhatsApp and store connections in Facebook Messenger.

American and European app developers have to make do without the broad support from policymakers and authorities that can be observed in China. However, this lack of support will probably only slow down the speed of development of these apps.

What makes a super app?

Without further considering their features, super apps are characterized by three factors from the point of view of the financial industry:

• Data leads to additional services: the companies behind the apps keep a close eye on the data provided to them by users. Interactions in social networks, every purchase and financial transaction are evaluated and are used to help to develop additional features. And this leads to an even stronger bond to the app, and Alipay users can continue to receive higher rankings according to an internal scoring system by making trouble-free transactions and purchases. On the basis of these scores, users are then granted access to special events and services. In this respect, the operators of these apps are much more agile than traditional companies, which may also have additional data silos.

• Transactions lead to trust: after initial skepticism when paying or shopping via the app for the first time, using the app becomes a habit. Users become more confident in the app's capabilities and the provider benefits from a growing reputation. This in turn makes it easier to offer "foreign" services at first glance. The integration of a payment method or the ability to view insurance contracts may initially seem to be of little importance. However, the insurance industry should not follow the example of the banks, which had underestimated PayPal for a long time, and even today, still don't have any developments of their own that come close to PayPal's reach.

• Super apps are becoming the gatekeepers of customer relations: the apps that are widely used in Asia are extreme examples. From the users' point of view, they use WeChat or Alipay, regardless of which company is actually providing the service behind it. The providers of super apps can thus claim customer access for themselves. As the app's reach and user loyalty grows, suppliers (such as banks and insurance companies) run the risk of becoming interchangeable – and of ultimately disappearing from the minds of customers.

Insurers should keep an eye on this development.

There is still no app in Europe, especially in Germany, Austria and Switzerland, which is as dominant as its equivalents are in Asia and in parts of India. Nevertheless, there are unmistakable trends in this country, such as merchant apps that combine payment and other services, and banking apps that also offer promising ideas for insurance companies.

This is good news for the insurance industry, because it means that there's still enough time to observe the further development of these apps and then take the lead with their own apps. It should not be forgotten that many consumers have a high regard for insurance companies. The decision to pay by using the app of a (known) insurance company rather than using another service would probably be relatively easy for consumers to make, because they may be reluctant to provide confidential data to a less well-known app developer.