The Super App: Myth, Reality or Something in Between
In my last post I dove into the rebundling movement and fintech companies’ focus on being the primary account as the holy grail to enable cross sell and therefore profitable unit economics.
In this post I'm going to dive deeper into the race among consumer fintechs to create the “super app,” what that means, and whether it’s even possible.
The concept of the primary account and the super app are related but different. I think about the primary account as the place where a consumer’s most significant banking activities happen — getting the paycheck direct deposit, and paying out core expenses like mortgage, rent, car payments, etc. Direct deposit switching has been the holy grail: get a user to move their income so it is deposited to your platform, landing the source from which other funds will flow (and ebb). Do that, and the rest (e.g., cross sell) follows. This is where the idea of the super app comes in. The commonly held view in consumer fintech is that if you can become the primary account, cross sell is more feasible because of how sticky the primary account is. If you can cross sell additional products — credit cards, investing, personal loans, credit building, etc., then you could be the super app to rule them all. The one-stop shop for a consumer’s financial life. We’ve seen Chime, Affirm, Cash App, SoFi, and countless others attempt versions of this.
While the logic makes sense, I would question this view — despite it being held seemingly universally. I can’t help but wonder if (1) the idea of the super app in its fullest form is even feasible today, and (2) if that is even what consumers want.
As we covered previously, the emergence of Banking as a Service (BaaS) platforms has made it easier than ever for companies to build banking products. This has been discussed a lot. What hasn’t is the fact that it is also easier than ever for consumers to manage multiple accounts across platforms.
The reality is that a person’s money is likely spread across several accounts today. I personally have 10+ apps just on my phone that I use. It doesn't mean that I have significant balances on all of them or that I use them even monthly, but they exist, and the use case is meaningful enough to have them on my phone. Taking inventory, I have 2 banks, 3 brokerages (2 equities and 1 crypto), and 3 credit card apps. I also have Venmo, Cash App, a social investing platform and others.
From my conversations with other millennials and Gen Z consumers, I’m not alone. Many have reflected that they are similarly distributed across several providers. A 2021 survey by Plaid shows a similar story. They found that on average, Millennials have 4.3 fintech apps on their phone and Gen Z have 4.6.
If I’m being totally honest, I’m not sure this is a problem. Or quite frankly I hadn’t even noticed that my financial life is so fragmented until I went through this exercise. Sure, a single view of each account might be helpful — but it honestly feels only marginally so. I’d personally rather optimize and pick the best in class product for each need than opt for convenience and have a unified pane of glass for my financial life. It seems like many other millennials and Gen Zs are the same.
As an important aside, there's also the reality that while it is easier than ever to 1) open an account and 2) maintain it, it remains hugely painful to shut down / delete a financial account. Importantly, this is where fintech is not like others and an important reason for some of the fintech app sprawl.
If that is true, I come back to the two questions I posed earlier. Maybe versions of a super app are possible in that some platforms will cross sell a few products or hold a subset of a consumer’s wealth, but I think it is unlikely that they hold everything.
In that sense, I think we’ve been thinking about the super app all wrong. It’s not taking root in the consumer world, because that is not what a consumer wants today. But the super app exists and can thrive in a different form if we widen the aperture and think about B2B. In this context the super app is the same as the holy grail of the OS in vertical SaaS.
The idea of cross sell as the ultimate goal has long held true for platforms targeting business users too. What is fundamentally different here is that if a platform can become a business’s primary OS, then it is easier to cross sell other fintech products. It’s not merely convenient to have a single dashboard; in some cases, it’s essential, or streamlines operations in other meaningful ways. Unlike the average consumer, the average company is pulling together disparate data for a P&L and reconciling invoices for tax purposes. Moreover, the value prop of the cross sell tends to compound, unlocking access to other, better (cheaper?) financial services due to enhanced underwriting.
That said, it is still early days in the world of B2B. Many markets, even with seemingly dominant vertical SaaS players, are underpenetrated. But I’ll be watching closely to see what happens there.
Do you agree with my conclusions above? Would love to hear what you think. Drop me a line below with your thoughts.
Great take! This is spot on with what I’ve seen in a consumer research project for a financial dashboard product. Most consumers don’t mind the sprawl and care much more about getting the best savings rate, credit card rewards or investing returns than they care about all of those products being in the same place. The only way for fintechs to compete with the amount of choice here is on price or hype, which is not very interesting.
In terms of seeing all your money in one place, this is only a real pain point for mid- to low-income consumers who need finer control to manage paycheck-to-paycheck life. Currently people use spreadsheets or a bunch of different budgeting apps, but there’s no standout in this space. It’s a significant segment who need some kind of better dashboard product, but the revenue model/opportunity seems unclear [at scale] given the cross-selling myth. There’s a hypothesized path here as a marketplace (e.g. Mint, CreditKarma) collecting revenue on fintechs’ CAC, but no one has cracked stealing meaningful share from Google and Facebook.
Your B2B thesis is much more compelling, where the value of the dashboard is more straightforward, essential and universal. I’m curious to see how the potential for enhanced underwriting plays out with B2B, since this seems like another myth in the consumer space.
Appreciate the thought-provoking post!