EY Underwater Coral

How super apps can speed FI growth by enabling new ecosystem models

The ecosystem business models and data analytics to leverage embedded finance capabilities can help FIs achieve broader growth objectives.

In brief

  • Large nonfinancial firms are launching super apps that integrate digital services from different vertical industries into one curated customer journey.
  • Forward-thinking FIs are experimenting with business models that provide customers with personalized value propositions outside their own ecosystems.
  • FIs can use embedded finance strategies to design unique services that differentiate their ecosystem offerings and create entirely new sources of revenue.

In recent years, many financial institutions (FIs) have built the open banking structures, platforms and application programming interface (API) capabilities required to embed financial products and services into other firms’ ecosystems. The emergence of “super apps” promises to raise the sense of urgency around the next step: embracing strategies to turn those investments into compelling value propositions for customers.

The appeal of super apps — large, super-fluid ecosystems that are already prevalent in other parts of the world — is driven by consumer and small-business expectations of seamless and hyper-personalized digital journeys, tailored to their own unique needs, situations and buying habits. The 2021 EY study, NextWave Consumer Financial Services: winning the battle for financial trust and relationship primacy, shows customers would like FIs to accompany them on those journeys, meeting their financial needs at the point of engagement — even outside the FI’s own digital ecosystem.

The ability to modularize products and services so they can be deployed through APIs on third-party platforms is table stakes for ongoing digital transformation. The bigger challenge comes in determining how to monetize those capabilities.

Pivoting to strategies and business models that can leverage the power of embedded finance requires FIs to critically assess their own strengths and think differently about how high volumes of third-party data can be used to customize product and services for specific target segments, such as Gen Z, millennials, or small business niches.

Super apps represent a disruptive new frontier in the digital transformation. FIs that adapt with agility could win new customers and deeper wallet shares by providing superior experiences, while those whose strategies lag might be disintermediated by nimble FinTech firms with better value propositions or the super apps themselves. FIs should plan now to play offense in this emerging environment.


Chapter 1

The rise of super apps

Super apps simplify things for consumers by bringing different experiences together into a curated marketplace.

The typical consumer uses dozens of digital services — for shopping, financial services, food delivery, ride sharing, travel and other activities — cobbling together their own digital ecosystems. Super apps simplify things by bringing those different experiences together into a curated marketplace where a consumer can do anything from buy a pair of shoes or book restaurant reservations to trade in digital currencies or take out a microloan to finance a small business.

This has been coming for a while. The 2019 research report, “How consumer financial services firms will drive financial well-being,” noted the growing complexity of managing so many different relationships and predicted the emergence of personal financial operating systems, powered by artificial intelligence-driven advice and sophisticated APIs, to help consumers manage their digital journeys.

Two years on, super apps are poised to fill that role, and their popularity in other markets highlights how disruptive they could be here. In China, for example, WeChat boasts 1.2 billion monthly active users, while its payments arm WeChat Pay counts about 800 million active users and has emerged as an enabler for incumbent FIs.

While there are regulatory and structural differences between markets, consumers everywhere seem to like the value proposition that large, curated ecosystems provide. In the US, powerful brands like PayPal and Walmart are planning to launch their own super apps; they, too, appear eager to make financial services integral to their offerings.


Chapter 2

Evolving customer expectations

Super apps are part of a broader trend toward super-fluid ecosystems being driven by changing customer needs.

They are challenging FI core competencies — including trust, data and product expertise — that have traditionally provided the foundation for profitable primary financial relationships (PFRs). The 2021 NextWave research highlights the changing views and expectations of consumers regarding FIs and ecosystems and presents a pathway to growth. Among the key takeaways:

FIs should seek to connect their products and services more seamlessly into other firms’ ecosystems.

In the survey, 63% of consumers said they would “highly value” open banking and embedded finance solutions that connect and personalize their experiences across third-party ecosystems. The sentiment was prevalent across all age groups, with an emphasis on functional benefits, such as maximizing rewards programs, customizing products or providing relevant content and advice.

Customers would prefer that FIs accompany them on their digital journeys, but superior experiences are likely to win out.

In the research, 37% of consumers named a FinTech firm as their most-trusted financial brand, compared with 33% who named a bank. FIs no longer have a trust advantage over their rivals but might be able to find growth by partnering with them.

FIs that build joint value propositions with super apps can expect to win new business.

About 7.5% of consumers in our survey said they would find combined FI-super app offerings attractive. We expect this percentage to grow as network effects increase.

The risk of disintermediation by super apps is high.

We expect most to offer products that our data show correlate with PFR status, such as debit cards (91.8% of consumers have debit cards through their PFR), checking accounts (69.7%) and credit cards (52.3%). Super apps have integrated these products into their offerings to enable intuitive customer journeys.


Chapter 3

Experiences are the new products

Offering financial services and data-driven advice and insights is crucial to super apps’ success.

Like other digital platforms, super apps want FIs to be part of their ecosystems — to facilitate payments, provide regulated financial products and contribute data needed to produce personalized experiences.

For banks and wealth managers, the calculus is slightly more complex. Many are concerned that distributing their products through ecosystem partners could threaten customer relationships. Others have concluded that ecosystem participation is a potentially promising avenue for driving growth in the digital age — a way to move past passive relationships to more-active customer engagement.

Understanding more about a customer’s lifestyle can uncover a greater diversity of needs, which can be used to build ever-more-personalized experiences. With ecosystems, experiences are the product.

To date, FinTech firms have proven more adept than incumbent FIs at both providing customers with unique value propositions and unlocking returns from ecosystem models. Beyond being tech-savvy, they are the primary product innovators, the ones with the agility to first offer buy-now-pay-later loans or to use data to dramatically speed small business lending. 

Investors have flagged the distinction. The analysis of market data shows that price-earnings (PE) ratios of publicly traded FinTech firms have grown 16% annually since 2017, largely due to the ecosystem success. Over the same period, PE ratios of banks, which have embraced ecosystem models less enthusiastically, have declined slightly.

EY Fintechs pe expansion compared with the contraction

FIs can reverse the trend by leveraging their strengths to create entirely new value propositions that may only exist in the ecosystem. For example, a bank could create a tool to monitor a consumer’s spending activity on an ecosystem and combine that information with its own internally generated insights to provide real-time financial advice. Or it could use the data available from an ecosystem to create a customized mortgage offering for a new customer in a target segment. These are new revenue streams — hyper-personalized products and services, enabled by embedded finance and built on ecosystem data — that the FI cannot create on its own.


Chapter 4

Different pathways to ecosystem success

There are many ways for FIs to leverage the power of integrated ecosystems to help drive growth.

FIs can play the role of behind-the-scenes financial utility or specialized product producer for a super app, pursue stand-alone digital strategies that target specific segments within an ecosystem or seek to own the entire customer value chain themselves.

EY Embedded Finance Open Banking Business Models

Some are already experimenting with different ways to incorporate super apps into their growth strategies. Illustrative examples include:

Green Dot

The FinTech has a collection of assets — a bank charter, full tech stack, and expansive retail network — that allows it to deliver a breadth of modern money management and payment solutions. It does this both directly to consumers through its flagship digital bank account GO2bank and to its partners through customized, end-to-end banking platform services focused on accounts and money movement embedded in their businesses. It already enables various technology and e-commerce companies to embed banking and payments in their brands and create deeper, more valuable experiences for their users.


The FinTech firm is using M&A to transform itself into a licensed digital bank for small businesses and young professionals. Recently announced acquisitions of Golden Pacific Bancorp and Galileo Financial Technologies, an API and payments firm with robust B2B capabilities, positions SoFi to play an aggregator role in clients’ digital lives with an expanded financial services offering that includes deposit-taking and loans.

BBVA Open Platform

The unit integrates banking and payments services such as identity verification, card issuance, account origination, and money movement into the offerings of large, nonfinancial companies and FinTechs. BBVA’s Open APIs support Digit, a FinTech specializing in cross-border banking services, and give accountants seamless and secure access to their small business customers’ accounts through Xero, another FinTech firm. BBVA also has partnerships with Google and Uber in Mexico.

The Bancorp

The financial holding company specializes in providing private-label banking and technology services for nonfinancial firms to offer customers. It provides checking and savings accounts, debit cards, payments and other banking services for FinTech firms, including PayPal and Betterment, and enables loyalty programs, gift cards and other services for Uber, Walgreens and other nonfinancial firms, making their ecosystems more robust.


Chapter 5

Creating value through embedded finance

FIs can take four actions to enhance value creation

Assess the market to determine your competitive differentiator


Smart questions lead to good decisions. Apply a strategic “size-of-prize” analysis to understand the most-promising growth opportunities and how to access them. What is the addressable market and how does it fit with your existing services? What are the expected revenues and costs? Which business models will drive efficacy?


Target customer segments for improved value creation


FIs can group customers into needs-based segments to identify the products, services and capabilities that can increase wallet share. Which segments do you want to target and what value propositions will attract and retain them? Do you have the operating models and governance to support those strategies? Do you have the analytics and agility to pivot business models as needs change?


Enhance embedded finance capabilities


For FIs, ecosystem strategies are built on embedded finance. If they haven’t done so already, FIs can begin modularizing core capabilities so they can be embedded into ecosystem value propositions by identifying bundles and capabilities that drive value for targeted segments and embracing API-driven, cloud-enabled technology stacks. They also can improve their abilities to incorporate data insights into product and services design.


Build, buy or partner


There is no one way to fill the capability gaps required to compete in an ecosystem environment; decisions are often made case by case, based on existing strengths and strategic priorities. To guide the process, FIs can develop a disciplined, robust build/buy/partner analysis framework. Do you have the resources and skills to build a differentiated solution? Will a partner provide the distribution you desire? If a firm has intellectual property that matches your strategy, does it make sense to acquire it?


Customers today expect holistic value propositions that mesh spending, investments and advice with shopping and other facets of their digital lives, and super apps are filling the void. FIs with the agility to quickly embrace embedded finance strategies, business models and technologies can leverage ecosystems to unlock growth and help achieve broader strategic goals.

The authors would like to thank Gavin N. Cadwallader for his contribution to this article.

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