Predictions for 2024, the rise of the superapps

Will this Change the Payments Economic Model?

Transcript:

Daniel Wolfe (00:09):

This is the final panel of the session. You are the hardcore payments experts, enthusiasts, and we do not wish to disappoint. For those of you just joining us, I'm Daniel Wolfe, Content Director covering payments and other things at American Banker. And would you like to introduce yourselves? Ben, you're sitting closest to me. Sure. So you're right in the line of fire here.

Ben Munos (00:32):

Hey, I'm Ben Munos, currently the Head of Banking for Cogni, which is Neobank that provides FDIC insured bank accounts with the non-custodial wallet spent time at Revolut and BOK Financial is the Head of Digital.

Abhijit Chaudhary (00:45):

Afternoon guys. My name is Abhijit Chaudhary, I'm the Chief Product Officer of Greenard Corporation. We are a FinTech company. We've been in the banking space for over two decades and we power many, many financial services companies in North America.

Daniel Wolfe (01:02):

So the title of this conversation, predictions for 2024, getting ahead of ourselves and the Rise of the Super Apps. So let's start off with the second part first. What is a Super App? How did that concept develop and what is the relevance to banks? Should they be threatened by it? Excited by it?

Abhijit Chaudhary (01:23):

Go first man.

Ben Munos (01:24):

No, you go ahead.

Abhijit Chaudhary (01:26):

The definition of Super App is very complex in other parts of the world. If you look at China, India or other economies, Super App is an aggregation of a variety of services, functionalities combined. One app in North America, the definition is a lot different because we don't have any one entity that does everything together. There are various reasons for it, but I think the expectation is an app that manages your entire daily life cycle. Everything you do is included in that one app.

Ben Munos (02:01):

Yeah, the only thing I'd add is I think the term Super App became super popular around the community. And so what you see, especially overseas like you mentioned, is there's a community that develops, whether it be around chat or groups or social, and then they start layering in financial components and other things that they can do inside that app. It's really organically. And then at the end of it it becomes this quote Super App that I do think is going to be the future of finance and especially on the digital side.

Daniel Wolfe (02:34):

So you had mentioned other countries, what can we learn from other countries? What Super Apps are there and what are the pros and cons? How well would they apply in the us?

Abhijit Chaudhary (02:46):

I'll give you an example. I would recommend the audience to Google Life in the day of a WeChat user. WeChat is the world's biggest Super App. Monthly activities for WeChat is 80 customers, let that sink in. Monthly is 80 million customers. And if you look at that life of a WeChat user, you'd realize starting from their routine in the morning where they can order breakfast or go to office in a cab or pay for the breakfast using the WeChat pay functionality or pay for the insurance or get an insurance or anything else, all encompasses in one app. Now the challenge with that is if you think about the viability of that in North America, there are two areas that are very important to focus on. One is the mindset of Americans. Are you comfortable opening an app? Let's say it's your banking app. You bank with Chase Wells Fargo or any of these guys and they have the Super App functionality. Are you comfortable opening your banking app where you've given all your PI data and ordering Chinese takeout from your neighborhood Chinese store? I myself am not comfortable. The second challenge we have is the entire security around data identification and how do you create a single sign on for all these utilities, even if it is one app with various functions? How do you create that single sign-on experience with the challenges we have today with data identity and authentication, that's a huge roadblock to overcome before the Super App concept can even become popular in America.

Ben Munos (04:34):

Yeah, I think that's a great point. And in terms of what essence we can learn, I'm sure if there's anybody that's ever been in a product management role for a FinTech or a bank that the number one thing you're concerned with is active users, right? You're trying to drive growth, you're trying to drive activity. Well what can we learn? 80 million active users is unbelievable. And so do we see in the US an organic kind of growth where product managers are coming in and saying, Hey, this doesn't fit my kind of traditional bank to be able to offer an Uber Eats integration into my bank. That doesn't necessarily make sense, but it does if it is seamless for payments, super easy checkout, all of my information's there. So can the product managers, especially on the digital side start to slowly incorporate this to really boost their activity, their transactions?

(05:25)

I think that could be one way that it kind of spans organically in the us. The other thing is we may just see a big bang, it may be Elon and Twitter, even though he is very controversial and I totally get that, but Twitter's a big eco ecosphere and it's got a great community base. So can he really launch some financial products and start to develop that kind of WeChat-esque thing in the us? And then lastly, just seeing what Apple did. Obviously they're offering high yield savings that's really very much community based. They have a community of Apple enthusiasts and now they're going to offer a best in class savings rate. So I do, I agree. I think there's a lot of challenges, but will you see the product manager start to chip away to try and drive user engagement away from some of those traditional things that we've heard about for 10 years? Like pfm, we've been hearing about PFM for 10 years, so maybe we shift the focus a bit and say what are our users actually doing? What are those things that they want to engage in and how can we incorporate those in the app? And I think that's one way we could learn and also incorporate it here in the us.

Abhijit Chaudhary (06:30):

And I tried to add what Ben just mentioned. He mentioned Apple. Apple is not an app, it's an ecosystem. Exactly. It's an ecosystem where you can talk to somebody, you can message somebody, you can send money, and now you can invest at a great rate. I talk to Apple regularly, they're a partner of ours. We power their Apple Pay cash utility, but without being an app, they're able to touch so many faces of life and there's a very important element there. They know what time you get up, they know where you spend money, they know everything you do. So for an institution like that, and if you move away from the concept of Super app, if you talk about who's ideally placed to build a utility like that for North America is institutions like Apple because of the data they possess.

Daniel Wolfe (07:18):

I think also with Apple it, it's a lot about just how present they are in their customer's minds or Google with Android, when it was time when I was younger, for me to apply for my first credit card, the easiest thing for me to do would've been to walk around my college campus and stop by one of the many tables where they were trying to get my attention by offering me a king size Snickers bar or a t-shirt in exchange for all of my social security number and whatever else they might need. And we don't do that anymore. So if I'm a college student and I'm looking at, okay, I need a credit card, I just have this device in my pocket and it's saying, Hey, I can just give you that. You don't even need to download an app because it came with your iPhone and that they're adding savings accounts and everything else, buy now, pay later. It just kind of makes it so you don't even have the hurdle of downloading the Super App. It's built into the phone. How do banks compete with that?

Abhijit Chaudhary (08:20):

That's a very interesting question, especially for GreenDot because we power a lot.

Daniel Wolfe (08:24):

How do other banks compete with that?

Abhijit Chaudhary (08:26):

I think instead of looking at a competition, I think banks are beginning to look at how do we work with them rather than being part of a competition? Yeah, have competitors. Apple has a lot of competitors in North America, people who do not want them to be part of their ecosystem, but financial distributions I think have taken a stance where they want to be part of that ecosystem as they grow that ecosystem. And there are a lot of other niches that have come out. For example, if you talk about Apple, not a lot of people look at Apple as a money movement service there, one of the biggest money movement services in North America. But there are other money movement services also, which are very relevant. Zelle. I think in the last previous topic you guys are talking about RTP from Clearinghouse, a very big Fed now is going to launch later this year. Very big money movements service. These are all parallel initiatives that have started in America to do the same. Now, banks are very close to these initiatives, so they are going to grow there to compete with what Apple's trying to do in terms of money, movement and services.

Ben Munos (09:34):

And I would just add, when you think about Apple or anybody that's trying to be a Super App that's layering in, again, I hate to keep using the same word, but communities and then layering in financial products and services, what they're doing, they're obviously not the bank, so they're aggregating banks in financial services that fit their model or their communities. So how do they compete? How do traditional banks compete? I think you have to be a player, like you said, a partner for these larger firms that are integrating your FinTech and be an aggregator of sorts. So if apples come in and they're aggregating the best financial products, you as a bank, even locally can compete in that space if you have the best niche product that they're looking for. And so I think that'll be one of the things as Super Apps or let's just say diversified financial applications kind of come to the market and gain some space players in the banking space are going to have to develop products that are super niche, that are best in class and be very specific so that they can be a player as well.

Abhijit Chaudhary (10:36):

Daniel, I'll add a point. I think this audience, we all have 10, 15, 20 years of work experience of plus in this industry. Our view of Super Apps is very skewed. If you look at the younger generation, and I was talking to somebody earlier today, I gave a lecture at the university in Vegas recently, and I asked them, this is engineering students. I asked them 30 engineering students, how do you get financial education? You know, guys are old enough to understand how the economy works. You guys are old enough to understand how you are going to make money in your career. How do you get your financial education? And I was surprised, and I'm probably in that target demographic where I am not as close to those newer apps. And the number one answer that came from that audience of 80 engineering students was TikTok blew my mind.

(11:32)

I said, you get your financial advice and how you're going to build your creditor, how you're going to open a bank account from TikTok. I said, are you serious? And that was the answer. And they are so confident about it. They're confident that an influencer that looks like a rapper is helping them improve their credit. And no offense, rappers are great, but they are helping them create this financial know-how and they believe that. And yes, there is potentially a lot of space for entities like that that are able to influence the younger generation to create a culture or an aggregation of multiple variety of services because they're just so used to that app. They spend hours and hours on that app trying to learn things.

Daniel Wolfe (12:19):

In their defense, I don't get my money advice from TikTok, but I've learned how to fix a running toilet or a hissing toilet from YouTube. And I think I'm not alone there. So I may be on that path to looking to influencers for more major life decisions.

Ben Munos (12:37):

Just to add on, I also think there's another component to this, which is the evolution of BASS, right? So your business that you're in is like 10 years ago, you want to go build the financial product or offer some kind of digital credit card or a debit card, you know, had to really build a product from the ground up. But the evolution of BASS has made it so we go to Green Dot, we plug into an API, we can now offer that in a month. And so as the evolution of BASS is evolving, you're going to see more and more maybe non-financially centered companies and organizations tip their toe into BASS and integrate up. And so you're right, it could be TikTok, it could be Facebook, but it's also a layered component with the evolution of BASS and all these products and services being able to be very quickly integrated through API.

Abhijit Chaudhary (13:28):

But I'd like to add a comment that I do believe in niche areas in our society. A lot of advancements have been made in a Super App concept because a Super App does not have to be the same definition that's followed in Asia elsewhere. And I thank you for the example Tiffany who's sitting here, she gave me this example. If I look at Zillow, Zillow for the longest time used to be just a site where you go and check for rentals. But now as an investor, I can go to Zillow, I can buy a property, do all the comparison, and I can find the realtor who can help me buy that property and I can find the lender that'll give me the loan at the interest rate I want, and I can use Zillow again to lease their or rent their house out. And there is a service that'll help me collect payments. It's the entire ecosystem end to end. It offers me everything I want, but it's for a niche area. And there are a lot of other niche areas that do the exact same thing, but they've looked at their own ecosystem and how can they bring all the services under one roof?

Daniel Wolfe (14:34):

Wow. I just use Zillow to see which of my neighbors have a pool in their backyard. So let's shift back to the first half of the title of this session, predictions for 2024. And we've hinted at that already with discussion of Fed Now, for example. For each of you, what is your big prediction for the payments industry for the year ahead? Whoever wants to close?

Ben Munos (14:58):

Okay. Yeah, I think what we're seeing, especially with the banks, as I would just say the banking market in general is I think a lot of the product folks are going to start really focusing on communication to their customers. If we look at Silicon Valley Bank, it's now being referred to as the Twitter run. And I think that that is really going to be a common theme moving forward is how do we communicate with our customers, let 'em know what's going on and not let it get to this feverish pitch online. And banks traditionally have struggled with that. I mean, when I worked in traditional banking, and even now in neobank, right? The government looks at everything that you put in writing very, very specifically. So sometimes we're a little apprehensive about going to social media and talking about what we're doing, what we're proud of, why we're a great bank to be with, but we're going to have to figure out a way to do that and do that in a great way that's regulatorily safe, but we have to communicate to our customers.

(16:01)

So I think a lot of the products, especially in app, will focus around really driving to speaking to their members, speaking to their users, telling them what's going on, telling them about their product sense. Today, Airbnb just launched a new app remodel, and I don't know if you saw the Twitter, it's getting a lot of feedback, but they basically went line by line with an app demo with 50 tweets and a thread that went through exactly what they were looking forward to. They said, Hey, I know that you're frustrated with hosts making you take out the garbage and throw it in the back and clean the sheets. So here's what we're doing about that. And I think that kind of response and that kind of communication to your customer is going to be critical for Neobank and become very critical for banking as well. So that's one of my predictions for 2024.

Abhijit Chaudhary (16:48):

I maybe have a different take on it, but I do hope to God this Twitter run is isolated and I hope banks don't fail like Silicon Valley Bank, but I do believe the rise and the popularity around BASS is maybe a little, it's been around for a long time. A lot of people have experimented with it. I think that there's a plateau that's reaching there, so we'll continue hearing about it, but maybe not as widely. I do think that this entire notion of real time payments is going to become more and more popular. This country has a lot of closed loop ecosystems, Zelle, Venmo, PayPal, you name it, there are so many of them. Visa recently did an announcement Visa plus. Yeah, it's going to tie all these ecosystems together. Fed Now's going to launch this year. I'm waiting to see the adoption of, we are an early pilot providers for Fed now, but I don't know if all the banks are going to adopt it, but I do think that money movement as a service is going to become very, very important.

(17:55)

It's going to be a hot topic. Every institution does money movement in some form or fashion. You pay your vendor, you pay your employees, you an Uber driver or a Lyft driver pays the driver once the ride is over. There is money movement everywhere. The real time concept of it and interoperability is going to become a highlight, I believe in 24. And you'll see a lot of development happening there. And I think it's needed for the industry. I think as a country, we still don't have a federally regulated money movement service, and I think it's high time that happens.

Daniel Wolfe (18:29):

Agree. On the subject of communication that you brought up, a lot of folks are talking about things like chat, GBT, AI, and just to plug a session that we did a year ago that you can see on demand, last year at this event, I spoke with Bess Healy from Synchrony about their chatbot named Sidney. And this bot has a whole personality. They know everything about her relationship status, what pets she has everything. And this was before the big chat GBT awareness came about. How do you see things either like chat, GBT or something more purpose driven like the chatbot that I mentioned, affecting bank's ability to be responsive to God forbid there is another Twitter run.

Ben Munos (19:20):

You go first. Okay. Yeah. So I think there's a front side and a backside, right? So on the backside I'll just say I think that AI is evolving so quickly and genuinely it feels like every week there's an update and it blow your mind. I think on the backside, we're now basically going to be able to plug in AI to draw insights to really bubble up. Hey, we're heavier risk here, or we can visualize risk in a different way. And I know there's a lot of compliance folks that have more to say about that than I do, but it used to take such a lag time between data coming in, delivery out to the executives who can make decisions, which is now going to be shortened to hours or minutes based on chat, GBT or let's just say a AI in general. And so I think on the backside, we're going to have amazing visualizations, amazing insights, and amazing data analysis at our fingertips. On the front side. You use a chatbot as an example. I think that if you're not going to basically build a FinTech that has some AI component that drives users to outcomes that they desire, then you'll be left behind. I do think it is that critical.

Abhijit Chaudhary (20:35):

Skynet is coming. No, maybe. But you know, brought up the example of a chatbot for the longest time. There are two kinds of chat bot available, and I'm sure you guys know there is a rule-based chat bot where you write all the rules. There's a machine learning based chat bot where to train the machine. Now with chat GBT, I think the training component that was successful for the longest time has that barrier is overcome. Yeah, you don't have to train the model as robust fashion as you have to traditionally because with teams empowering chat, GBT, and all these other institutions, empowering chatting, I got an email this morning I'm sure some of you did, where LinkedIn is launching chat GBT or an AI capability where based on how you look, what are you doing? LinkedIn's going to create a profile for you and it's all done in AI.

(21:30)

This is how it's going to revolutionize. And when it comes to payments, I think the longest challenge every banks have had thousands of customer service agents, you need them because they help our customers understand what's going on with your payments. You don't see a transaction. All of these things, a chat GBT will be able to answer and reliance on chatbots and technologies like that is going to grow and reliance on human people or customer service agents talking to customers is going to come down. I think that technology is fascinating and yeah, a lot more advancement is going to come there.

Ben Munos (22:09):

Yeah, I'm super interested and I have no idea where it'll go, but six or seven years ago we launched digital advice on the wealth management side for BOK Financial, which was great, but that is really, hey, we've got models driven by investment advisors, and then you get mapped by your risk into those models. I'm curious if robo-advising will take off to be truly robo-advising within risk parameters. And Torrance is set by the bank, but if somebody can come in and say, Hey, what happens based on what I'm seeing with the stock market today? Or what happens is if SVB, I'm not feeling very comfortable right now, if we can drive through AI insights and then rebalance accounts, I think the future is probably unlimited. I think we could probably speak at NAM about it, but I do think that AI is going to completely change finance in the next few years.

Abhijit Chaudhary (23:00):

But if you ask my chief financial officer, he would believe that AI will help him create better forecasting models. So the fed rate hike that just happened a few minutes ago, he'll be able to forecast that better and banks will be able to anticipate these changes better. But again, sure.

Daniel Wolfe (23:14):

I will just say the risk of that and in customer service is my experience with chat GBT is, it doesn't always tell me what I want to hear. It tells me the truth. That's true. And the example was this, we're almost on Star Wars day, may the fourth, and I was asking chat GBT, how do I convince my wife to let me buy an authentic Disney lightsaber? And Chachi PT did not take my side. It said, Daniel, nobody needs to own this thing. And it's up to your wife to decide for herself whether she's comfortable with you making this purchase. And I'm thinking, okay, this technology's used dangerous before. I have a few more questions, some topics we didn't get to yet, but in the interest of time, if anybody here wanted to chime in or ask questions or share your own predictions, the mic is open and if you all just want to make your flights, I can just go back to my question. Oh, you were just stretching. Okay. So we had also talked about, or in our prep hall, we had talked about the war in Ukraine and how changes on a global scale affect how we operate would, What are your expectations regarding that?

Ben Munos (24:31):

You me, go for, okay. All right. Yeah, so it's been pretty challenging for Cogni. We had an offshore development team, pretty large offshore development team in Russia. And when the war broke out, we've had to really evolve. These are superhuman issues and work comes second. So now we have Russian developers in Mexico and Turkey and everywhere across the world. And so yeah, it's been a huge disruptor and I think we've grown a lot as a company. I think it's been amazing to both support them socially and with what they're going through, but also just to show that we can work anywhere in the globe and figure it out. And certainly there were growing pains and would prefer that they could be in their homes with their families. But it certainly has been an empowering and enlightening kind of year for us, for sure.

Abhijit Chaudhary (25:27):

Not as much as an impact from the Ukraine crisis, but in the last four years we've gone through multiple crises, right, at an emotional scale, at a financial scale, at a global scale. And starting from 2019, Green Dot decided to go 29, 20 to go work from anywhere. We had a huge office in Pasadena, California. We decided that it's just not feasible to us people to come to the office anymore. And we decided it makes sense for everybody to be worked from anywhere. It was the first time we adopted that model. It was very challenging. I typically grew up in a place where it makes sense to get up in the morning, go to the office, but then coming from work from home. And today as I live in Vegas, I would never go back to office. And what I also realized was productivity for my teams have been the highest ever.

(26:22)

It's never been this high. And now I have the freedom of deciding what I want and how I want to do it, and that's really helped us. But for a lot of people that's not the same. I still encounter issues within my team where there is stigma. I'm not comfortable with my background showing because my living room is not as fancy. We created a policy in the teams where nobody's allowed to show their backgrounds, have a virtual screen, and we all are okay with it because I don't want to be in a position where I'm forced to judge somebody. And these are all new learnings. We didn't create these things when we launched this concept, but in the last three, four years, we've learned so much. And we've pushed ourself to an extent where we've found an ability to be successful in trying these new things. And as the pandemic has taught us, or the war in Ukraine has taught us that life goes on and you just have to be open-minded to experiment with new ideas. And I think that's what we will be, we continue seeing in this payment services space.

Ben Munos (27:24):

And I would agree, and I think one lesson learned from all it Covid Ukraine is talent wants to be trusted. And I think you kind of hit on it is we as a FinTech that's smaller, we thrive on picking up talent from the big guys that are stringent. I would say tons of our top talent are from top five banks that basically said they were frustrated with having this kind of freedom of lifestyle. And then they have to be molded back into that corporate world. And so I would say if you're looking for the best talent, you need to be flexible and you really need to listen to your employees. Yeah.

Daniel Wolfe (28:06):

And on that note from me, before the pandemic, my team was entirely remote. I was the only one in my own time zone going to an office. I mean, my boss was in that office, so I had to go, but my team was entirely remote and I always wanted to try and make sure that they still had visibility. And when the lockdown started and we were all at home, nobody had a bigger office than anybody else. Everyone had the same size square on Zoom. And it was actually really amazing to see that it was a level playing field. And as we go back to hybrid or to the office or not that at all, I just hope to be able to preserve that level playing field for folks because even over the course of the past few years, we haven't really cared where somebody lives when we hire them. People who had lived within range of the office had moved. And I, that's just my takeaway that I hope to share. We are out of time. This is not the last session of the day. You do not want this one to go over. So I want to thank everybody who joined us for this. Thank you very much. I want to thank you both for sharing your insights. See you next year in Fort Lauderdale.