the marketplace for goods and services has shifted away from the physical world and onto mobile devices thanks to digital technology and availability of affordable smartphones.
This is according to a report by Economist Impact, which notes that companies today are delivering a host of services directly through mobile phones. Ride hailing, e-commerce, money transfers, and education are some of the services which consumers can now access through their phones, the survey states.
And now, super-apps – apps that combine many functions in a single application – are taking the proposition even further, the Mastercard commissioned report reveals.
The report focused on the Middle East and Africa.
Ngozi Megwa, the Vice President of Mastercard said that the region should be prepared for the next wave of innovation.
“While the region gets to grips with the technologies and business models that have transformed global business over recent decades, it must also prepare for the next waves of innovation and digitalization especially in the area of mobile financial services.”
Megwa said that Mastercard is well-positioned to interconnect players from various sectors, such as banks, fintechs, digital giants, and more, to enable them to capitalize on the opportunities that super-apps provide. Mastercard has also pledged to provide the players with the most innovative technology solutions, platforms, and propositions.
“New technologies such as quantum computing, blockchain or open banking will present new challenges and opportunities and will bring profound change to the growth trajectory of super-apps in the region,” said Megwa.
Super-apps are challenging existing players that have to face competition from players outside their sector and are complicating the picture for regulators as these firms no longer fall into neat sector categories. In this new digital world, a company that offers ride-hailing services can also offer loans and one that offers groceries can also enable money transfers.
The report further shows that the growth for aspiring super-app players is in having a large and trusting user base which is critical to succeeding in the transition from a single service to a super-app.
Consumers who have already been won over by the initial service are more likely to embrace a new offering provided within the same app rather than use a different app that could be time-consuming, which is where partnerships play a critical role in advancing the growth of super-apps.
In the region, mobile payments systems usually involve a partnership between super-apps and a licensed traditional financial institution. For both, it extends their market reach into market segments they could not otherwise service profitably.
The study highlighted that for non-financial services companies, it can equip them with the capabilities and essential infrastructure needed to make money transfers, which would not have been otherwise possible. For banks, on the other hand, these partnerships help them access remote consumers or consumer segments they had chosen not to serve.
These partnerships can also allow banks to experiment with innovative digital offerings without the up-front investment and associated risk. Banks can also use these technology firms as a pool of specialized skills that they would find challenging and expensive to assemble on their own account.
Walter Pasquarelli, the research manager at the Economist Impact believes that companies that seek to use super-apps should have a clear understanding of the existing financial services ecosystem.
‘This study throws light on this issue and will enable players within the super-app ecosystem to gain significant insights which will help the growth of super-apps in the region,” said
In the Middle East and Africa, locally or regionally grown super-apps have the advantage to scale internationally but a few have chosen to make a geographical or local specialization their unique selling point as they have a full understanding of local cultural norms and preferences.
In addition, the report highlights that companies in the region have many regulatory and operational hurdles to overcome despite the many advantages apps with a large user base may possess as they transition to a super-app.
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