Digital banking has exploded onto the scene in emerging markets across Southeast Asia and Africa, promising greater financial inclusion and convenience. However, many digital banks are struggling to turn a profit, raising questions about their long-term viability. At the same time, super-apps – all-in-one platforms offering everything from payments to ride-hailing – have become immensely popular in these regions. This report examines the profitability challenges facing digital banks in Southeast Asia and Africa, explores the rise of super-apps as a strategic response, and analyzes how these trends are reshaping the financial services landscape. We also discuss the implications for financial institutions and fintech providers, and highlight key considerations for building sustainable digital banking systems in these markets.
Profitability Challenges for Digital Banks in Emerging Markets
A McKinsey analysis found that many African fintechs face customer acquisition costs that far exceed the revenue they generate per customer – in some cases spending up to $20 to acquire a customer, but earning only $7 from that customer. This stark imbalance calls into question the sustainability of their business models. Several factors contribute to these profitability struggles:
High Customer Acquisition Costs: Digital banks often spend heavily on marketing, promotions, and referral incentives to attract customers in competitive markets. In Africa, for example, fintechs have subsidized services and run expensive campaigns to build user bases, which can erode margins. In Southeast Asia, intense competition has led many digital banks to offer cashbacks, zero fees, and other perks to entice users, effectively subsidizing customers to secure temporary loyalty. These acquisition costs are hard to recoup if customers do not generate sufficient ongoing revenue.
Low Revenue per Customer: Many digital bank customers in emerging markets have limited financial means or are new to formal banking. They may hold small account balances and conduct only basic transactions (like P2P transfers or mobile top-ups) with low fee income. Without higher-margin activities (like lending or wealth management), digital banks struggle to scale revenues to match their costs.
Limited Product Differentiation: A number of digital banks offer similar products – basic savings accounts, payments, and simple loans – with little differentiation. This commoditization means customers can easily switch between providers, and banks have little pricing power. In Southeast Asia, stiff competition and a lack of unique product offerings have forced many digital banks to keep fees low or offer services at a loss to stay competitive The result is a race to the bottom on pricing, squeezing profitability.
Regulatory and Compliance Costs: Even though digital banks operate online, they must comply with the same financial regulations as traditional banks (KYC/AML requirements, data protection, etc.). Meeting these compliance obligations can be costly, especially for smaller players. Additionally, some markets impose capital requirements or other rules that increase the cost of doing business.
Technology and Infrastructure Investment: Building a robust digital banking platform requires significant upfront investment in technology, cybersecurity, and IT infrastructure. Many digital banks continue to invest heavily in scaling their systems and improving user experience, which can delay profitability. In Africa, unreliable internet infrastructure and the need to support low-end feature phones add complexity and cost to delivering digital services. While these investments are necessary for growth, they contribute to operating expenses in the short term.
Market and Economic Factors: Emerging markets can be volatile, with economic swings, currency fluctuations, and lower financial literacy affecting customer behavior. In Africa, for instance, many digital banking users are young urbanites who are already banked, raising the question of whether digital banks are truly expanding the market or just poaching customers from incumbents If the addressable market of unbanked customers is harder to reach or less profitable, growth can stall. Additionally, macroeconomic factors like high inflation or interest rate changes can impact funding costs and loan defaults, affecting profitability.
Despite these challenges, there are notable exceptions. A few digital banks in Asia have cracked the code to profitability. For example, China’s WeBank and MYBank (backed by Tencent and Alibaba, respectively) became profitable within a year of launch by leveraging massive ecosystems and data-driven lending. The 2019 annual report shows The 2019 annual report shows that the revenue was 14.87 billion yuan, and the net profit was 3.95 billion yuan. MYbank’s revenue was 6.628 billion yuan, an increase of 5.7% from 6.27 billion yuan in the same period of the previous year; the net profit was 1.256 billion yuan, compared with 658 million yuan in the same period of the previous year. South Korea’s Kakao Bank also reached profitability quickly by piggybacking on the ubiquitous KakaoTalk super-app platform. These success stories often involve unique advantages – large existing user bases, diversified revenue streams, or strong backing – that most new digital banks in Southeast Asia or Africa lack. For the majority, achieving sustainable profitability remains an uphill battle.
The Rise of Super-Apps in Financial Services
Amid the struggle for profitability, a parallel trend has emerged: the rise of super-apps that integrate financial services into broader digital ecosystems. A super-app is a single mobile application that offers a wide range of services – from messaging and social media to ride-hailing, food delivery, e-commerce, and financial transactions – all in one platform. Asia has become the global leader in super-app adoption, with platforms like WeChat (China), Grab (Southeast Asia), Gojek (Indonesia), and Paytm (India) amassing hundreds of millions of users[https://www.bamboodt.com/digital-banking/]. These super-apps have transformed how people interact with digital services by providing convenience and integration that traditional standalone apps cannot match.
Smartphone displaying “Super APP” with icons for Delivery, Lifestyle, Payment, Taxi, Food, Medicine
Several factors have fueled the super-app phenomenon in emerging markets:
Mobile-First, High-Frequency Use: In regions like Southeast Asia and Africa, a large share of the population came online directly via smartphones, bypassing desktop computers. Super-apps capitalize on this mobile-first behavior by offering a one-stop solution for daily needs. By focusing on high-frequency use cases (like messaging, payments, or ride-hailing), super-apps drive daily user engagement and build massive user bases[https://www.bamboodt.com/digital-banking/]. For example, Grab started as a ride-hailing app but expanded into food delivery, payments, and more, ensuring users open the app multiple times a day for different services.
Unbanked Population and Financial Inclusion: A huge portion of the population in these regions was unbanked or underbanked. Super-apps saw an opportunity to provide financial services to the unbanked through digital wallets and simple financial products, often without requiring a traditional bank account. In Southeast Asia, more than 70% of the population was unbanked in the early 2010s. Super-apps like Grab and Gojek introduced e-wallets that allowed even those without bank accounts to make payments, store value, and access credit. This focus on inclusion helped super-apps rapidly grow their user base. In Africa, mobile money platforms like M-Pesa essentially function as super-apps for financial services, enabling millions of unbanked people to send money, pay bills, and even get microloans via their phones.
Fragmented Markets and Localization: Many emerging markets are fragmented with diverse languages, cultures, and needs. Super-apps succeeded by localizing their services and aggregating a variety of offerings that cater to local preferences. For instance, Grab and Gojek tailored their platforms to Southeast Asian contexts – integrating local payment methods, offering services like motorcycle taxis (ojek) in Indonesia, and partnering with local merchants. This localization and breadth of services made them indispensable in daily life. By contrast, global players that offered only one service (e.g. Uber for rides or Amazon for e-commerce) struggled to capture the same mindshare. Super-apps became the default platform for many users’ digital activities, from socializing to shopping to banking.
Network Effects and Ecosystem Lock-in: As super-apps added more services, they benefited from powerful network effects. Each new service (a new merchant, a new bill payment option, a new financial product) increased the value of the app for existing users, drawing in even more users. This created a virtuous cycle. Users tend to stick with one super-app ecosystem because it covers so many needs, leading to high retention and engagement. For example, WeChat in China started as a messaging app but now handles payments, social media, shopping, and more – users have little reason to leave the WeChat ecosystem for daily tasks. This lock-in is a strategic advantage: it allows super-apps to cross-sell financial services to a captive audience and collect rich data on user behavior, which can be used to refine services and target offers.
Super-apps have indeed become a dominant force in the financial services landscape of these regions. In Southeast Asia, super-apps are now the primary interface for digital financial services for many consumers. They have effectively blurred the lines between tech companies and financial institutions.
The strategic importance of super-apps lies in their ability to own the customer relationship and data. By being the gateway through which users access financial services, super-apps can capture valuable user data and insights. They can also earn revenue not just from financial transactions, but from adjacent services (commissions on ride-hailing, advertising, etc.), which helps subsidize financial offerings and attract users. This multi-revenue model is a key reason super-apps can afford to offer low-cost or free financial services – they make money elsewhere in the ecosystem. Traditional banks and standalone digital banks, by contrast, often rely solely on financial product margins, which are thinner. In essence, super-apps have turned financial services into a loss-leader or value-add to drive engagement in a broader ecosystem, rather than the sole profit center.
Strategic Responses: Super-Apps vs. Digital Banks
The rise of super-apps has prompted different strategic responses from digital banks and incumbent financial institutions. In many cases, the lines between these players are blurring as each tries to adopt the strengths of the other:
Super-Apps Embracing Banking: Recognizing the value of offering full-fledged banking services, many super-app operators have sought banking licenses or partnerships to become digital banks. This allows them to hold deposits, issue credit, and provide a more comprehensive suite of financial products under their own brand.
Digital Banks Expanding into Ecosystem Services: On the flip side, some digital banks are trying to become more like super-apps by expanding their service offerings beyond traditional banking. They recognize that to increase user engagement and lifetime value, they need to be present in more of their customers’ daily activities. For instance, some digital banks in Southeast Asia have integrated features like bill payments, mobile top-ups, ride-hailing bookings, or e-commerce deals within their apps. The goal is to make the bank’s app a one-stop platform where customers not only check their balance but also pay for services, shop, or book travel. DBS Bank in Singapore, while a traditional bank, transformed its DBS Digibank app into a super-app by adding peer-to-peer payments, bill splitting, QR payments, and even integration with food delivery and shopping services. This approach increases the app’s utility and keeps customers engaged more frequently. Even pure-play digital banks are exploring partnerships to embed non-financial services – for example, a digital bank might partner with a ride-hailing service or e-commerce platform to offer exclusive discounts to its customers, effectively bringing those services into the bank’s ecosystem.
Partnerships and Ecosystem Integration: Rather than go it alone, many financial institutions are partnering with super-apps or other ecosystem players. This can take the form of banking-as-a-service (BaaS) arrangements, where a traditional bank or digital bank provides the backend financial infrastructure (payments processing, lending, etc.) while a super-app or tech company provides the front-end user interface and customer access. Such partnerships allow banks to reach a much larger customer base through the super-app’s platform, and allow the super-app to offer financial services without building all the banking technology from scratch. For example, in Africa, some banks have partnered with mobile network operators to offer mobile money services. In Southeast Asia, banks have partnered with e-wallet providers and super-apps to co-brand credit cards, offer microloans, or distribute insurance products. These collaborations are driven by mutual benefit: banks gain scale and data, while super-apps gain credibility and a broader product range. They also reflect a recognition that ecosystem integration – rather than a siloed approach – is key to success in the digital era.
Incumbent Banks Going Digital and Ecosystem-Focused: Traditional banks in these regions are not standing still. Many have launched their own digital banking arms or revamped their mobile apps to be more super-app-like. Some have also invested in or acquired fintech startups to bolster their digital capabilities. The result is a more level playing field where even legacy banks are adopting a digital-first, ecosystem-oriented mindset to stay relevant.
In summary, the competitive landscape is evolving into an “ecosystem battle” rather than just a bank vs. fintech fight. Super-apps are becoming financial institutions, and financial institutions are trying to become super-apps or at least embed themselves in super-app ecosystems. The endgame for many players is to become the primary platform in a customer’s digital life – the one they open multiple times a day. Those that succeed in owning that primary relationship can monetize it through a variety of means (transactions, data, cross-sell) and achieve the scale needed for profitability.
Implications for Financial Institutions and Fintech Providers
The convergence of digital banking and super-app strategies carries several important implications for financial institutions, fintech companies, and the providers who build their systems:
Customer Experience and Expectations: Consumers in these markets now expect seamless, integrated experiences. Super-apps have set a high bar for convenience – users want to perform financial tasks without leaving their favorite app or platform. This means financial institutions must prioritize user experience (UX) and integration. A digital bank that offers only a basic mobile banking app may struggle to retain users who can get a more engaging, all-in-one experience elsewhere. Banks and fintechs need to design intuitive, feature-rich interfaces and possibly integrate with popular platforms (via APIs or embedded finance) so that their services are available where customers already spend their time. In short, meeting customers on their terms – whether that’s within a super-app or through a standalone app that feels like a super-app – is crucial for success.
Data and Personalization: Super-apps thrive on data. They collect data on user spending, travel, shopping habits, social connections, etc., which they use to personalize services and target offers. Financial institutions can learn from this by leveraging data more effectively. Banks that can analyze customer data (with appropriate privacy safeguards) to offer personalized product recommendations, tailored credit offers, or proactive financial advice will be more competitive. Fintech providers can assist by offering advanced analytics and AI tools that help banks make sense of big data and deliver personalized experiences. Additionally, as super-apps and banks partner, data sharing (within regulatory limits) can create more holistic views of customers. For example, a bank partnering with a ride-hailing app could gain insights into a driver’s income patterns to offer better loans. The implication is that data-driven personalization will be a key differentiator – those who use data to deepen customer understanding can increase engagement and cross-sell, boosting revenue per customer.
Technology Architecture and Agility: To compete in this fast-evolving landscape, financial institutions need agile, flexible technology architectures. Super-apps are built on modern, modular tech stacks that allow rapid feature development and integration of third-party services. Banks and fintechs must modernize their core systems and adopt open APIs to enable quick integration with partners and new services. This often means moving to cloud-based platforms, using microservices architecture, and embracing DevOps practices for faster deployment. Fintech solution providers can support this by offering digital banking platforms that are modular and API-driven, allowing clients to plug in new capabilities (payments, lending, etc.) and integrate with external apps. The ability to iterate quickly is vital – what customers want today (say, a buy-now-pay-later feature or integration with a new social app) might change tomorrow. Institutions that can’t keep up with these changes risk losing relevance. Thus, investing in scalable, agile technology is not just an IT upgrade but a strategic imperative.
Regulatory Engagement and Compliance: The rise of super-apps in finance has caught the attention of regulators. In many countries, regulators are updating frameworks to ensure that non-traditional players (like super-apps acting as banks) adhere to prudential rules, consumer protection, and anti-money laundering standards. Financial institutions must engage proactively with regulators and be prepared for new compliance requirements.
Collaboration vs. Competition: The ecosystem approach often blurs the line between competition and collaboration. Financial institutions may find themselves both competing with and partnering with the same super-app or fintech. For example, a bank might compete with a super-app’s digital wallet but also partner with that super-app to offer a co-branded credit card. This requires a strategic mindset – identifying which battles to fight and which opportunities to seize through partnership. Fintech providers can facilitate collaboration by offering white-label solutions or BaaS platforms that allow incumbents and tech companies to work together. The ecosystem trend suggests that no single player can do it all alone; success may depend on building the right alliances. For instance, a regional bank might partner with a local super-app to gain digital reach, while the super-app gains a banking license and product expertise. Both can benefit from the synergy. The key implication is that in the emerging landscape, ecosystem orchestration – the ability to connect with other players and create value jointly – is as important as internal capabilities.
Focus on Financial Inclusion and Sustainability: Both digital banks and super-apps have a unique opportunity to drive financial inclusion in emerging markets. However, to truly capture the unbanked and underbanked segments, they must design products that are affordable, easy to use, and culturally relevant. This means offering services in local languages, supporting low-bandwidth environments, and keeping fees low. Fintech providers can assist by providing solutions that are cost-effective to deploy at scale (for example, USSD-based banking for feature phone users, or agent banking networks integrated with digital platforms). There is also a growing emphasis on sustainability and social impact – investors and regulators are looking at how fintech can contribute to sustainable development. Financial institutions that align their digital strategies with inclusion and sustainability goals (such as offering microloans to small businesses, or green finance products) may find more support and goodwill. The implication is that profitability should not be pursued at the expense of these broader goals; in fact, serving the underserved can be a profitable strategy in the long run if done efficiently, as evidenced by the scale of mobile money services.
Key Considerations for Building Sustainable Digital Banking Systems
For financial institutions and fintech companies embarking on building digital banking systems in these markets, several key considerations should guide their approach:
Scalability and Reliability: The systems must be able to handle rapid growth in users and transactions. In emerging markets, user adoption can spike quickly (for example, during a pandemic or due to a viral referral campaign). The banking platform needs to scale horizontally to accommodate millions of users and ensure uptime and reliability. Any downtime or slow performance can erode trust, especially if users are comparing the experience to a smooth super-app. Investing in cloud infrastructure, load balancing, and robust disaster recovery is essential. Fintech providers often highlight scalability as a core feature of their solutions, given the explosive growth seen in places like Southeast Asia (where digital banks have added millions of users in a short time).
Modularity and Flexibility: As the financial ecosystem evolves, banks will need to add new services or integrate with new partners. A modular architecture – where components like payments, lending, wallets, etc., are decoupled – allows for easier updates and integrations. This means choosing a digital banking platform that supports plug-and-play modules or APIs for third-party services. For example, if a bank wants to add a buy-now-pay-later feature or integrate with a popular e-commerce site, a modular system makes it simpler to do so without overhauling the entire system. Flexibility also means the system can adapt to different market needs – perhaps supporting multiple languages, currencies, and regulatory requirements as the bank expands regionally.
Security and Fraud Prevention: With the increase in digital transactions comes an increase in cyber threats and fraud attempts. Building a secure system is paramount. This includes strong encryption, multi-factor authentication, real-time fraud detection, and compliance with data protection laws. In Africa and Southeast Asia, where trust in digital services is still being built, any major security breach can set back adoption. Financial institutions should implement robust cybersecurity measures and possibly partner with specialized security firms or use security-as-a-service solutions. Additionally, educating users on security (like how to protect their PINs or detect phishing) is part of a sustainable approach. A secure system not only protects customers but also protects the bank’s reputation and bottom line (by avoiding fraud losses and regulatory fines).
Localization and User-Centric Design: To drive adoption, the digital banking system must resonate with local users. This means localizing the interface into local languages, using familiar examples and metaphors, and designing for the local context. For instance, in some African markets, many users still use basic feature phones, so offering USSD-based banking or a lightweight mobile web app can be crucial. In Southeast Asia, integrating local payment methods (like e-wallets, QR codes, or even cash-in/cash-out via agents) is important because not everyone uses cards or online banking. User-centric design also involves simplifying processes – many new digital users may not be familiar with complex financial workflows, so the app should guide them with intuitive steps and minimal friction. Fintech providers experienced in these markets often emphasize localization capabilities and user experience design tailored to emerging market users.
Agent Network Integration: In many emerging markets, especially in Africa, a hybrid model of digital and physical touchpoints is needed to reach customers. Agent banking networks – where authorized retail agents help users with cash deposits, withdrawals, and account onboarding – have been a cornerstone of mobile money success. A sustainable digital banking system should integrate with such agent networks, providing agents with a secure interface (often a mobile app or USSD code) to transact on behalf of customers. This bridges the gap between digital and cash, which is critical since cash remains prevalent. For example, a digital bank in Nigeria or Indonesia might rely on a network of small shops or kiosks to allow customers to convert cash into e-money and vice versa. Ensuring the agent system is well-integrated, monitored (to prevent fraud), and incentivized is key to scaling the digital bank’s reach into rural and semi-urban areas.
Regulatory Compliance Built-In: From the outset, the system should be designed to comply with local regulations. This includes features for KYC (Know Your Customer) verification (which might involve biometric identification or integration with national ID systems), transaction monitoring for AML (Anti-Money Laundering), and reporting tools for regulators. Using a platform that has experience with the regulatory requirements of Southeast Asia or Africa can save a lot of time. For instance, some fintech providers offer pre-built modules for regulatory reporting or compliance with central bank mandates (like maintaining float accounts for e-money, or implementing credit bureau reporting). By embedding compliance into the system architecture, banks can avoid costly retrofits and ensure they can adapt to new regulatory changes quickly.
Partnership Enablement: Given the ecosystem approach, the digital banking system should facilitate partnerships. This means having a robust API layer that third-party providers (super-apps, e-commerce platforms, fintech services) can connect to. For example, if a ride-hailing app wants to offer in-app payments powered by the bank, the bank’s API should support that integration securely. Likewise, if the bank wants to offer its services via a super-app’s platform, the system should handle co-branded accounts or white-label experiences. Partnership enablement also involves data sharing protocols – the system should be able to securely share necessary customer data (with consent) to enable personalized offerings through partners, while still maintaining data privacy. In essence, building with an open API mindset ensures the bank can plug into the broader digital ecosystem and not remain siloed.
Monetization Strategy and Analytics: Finally, the system should support the bank’s monetization strategy. This might include tracking various revenue streams (transaction fees, interest income, commissions from partners) and providing analytics to understand customer profitability. For example, if the bank plans to make money through merchant fees on its e-wallet, the system should track those and possibly offer incentives to drive volume. If it plans to cross-sell insurance or investments, the system should have modules for those products and track their uptake. Analytics tools can help identify which customer segments are profitable and which are not, guiding adjustments in strategy. A sustainable digital bank will continuously refine its product mix and pricing based on data – the system should facilitate that by providing rich reporting and integration with business intelligence tools.
In building their systems, financial institutions should also consider the total cost of ownership and ROI of their technology choices. While cutting-edge solutions are important, they must be cost-effective enough to allow the bank to eventually turn a profit. This is where partnering with experienced fintech providers can help – many offer cloud-based solutions on a subscription or transaction-fee basis, which reduces upfront capital expenditure and aligns costs with scale.
Conclusion
The digital banking revolution in Southeast Asia and Africa is at a crossroads. On one hand, digital banks have brought financial services to millions and introduced much-needed competition and innovation in the banking sector. On the other hand, the path to profitability has proven elusive for most, highlighting the need for new strategies. The rise of super-apps offers a compelling model: by embedding financial services into broader digital ecosystems, companies can achieve scale, engagement, and diversified revenue streams that pure-play digital banks often lack. We are witnessing a strategic convergence where super-apps are becoming banks and banks are striving to be more like super-apps.
For financial institutions and fintech providers, the key takeaway is that success will come to those who can balance innovation with sustainability. This means delivering exceptional user experiences, leveraging data and partnerships wisely, and building robust, compliant systems that can scale. It also means focusing on the customer’s entire journey – not just banking transactions, but the full spectrum of their digital life. The “endgame” in this evolution is not necessarily one dominant super-app or bank, but rather a rich, interconnected financial ecosystem where consumers have seamless access to services through the platforms they love. In such an ecosystem, traditional banks, digital disruptors, and super-app operators will all have roles to play, likely as partners as much as competitors.
Ultimately, the institutions that thrive will be those that remain agile, customer-centric, and willing to collaborate. By learning from each other’s strengths – whether it’s a bank adopting the engagement tactics of a super-app or a super-app adopting the risk management rigor of a bank – the industry can move toward a future where digital financial services are both widely inclusive and financially sustainable. In emerging markets like Southeast Asia and Africa, this future is not far off:The stage is set for a new era of finance – one where profitability and inclusion go hand in hand, powered by technology and ecosystem thinking.
Digital Banking Profitability and the Super-App Endgame in Emerging Markets
Introduction
Digital banking has exploded onto the scene in emerging markets across Southeast Asia and Africa, promising greater financial inclusion and convenience. However, many digital banks are struggling to turn a profit, raising questions about their long-term viability. At the same time, super-apps – all-in-one platforms offering everything from payments to ride-hailing – have become immensely popular in these regions. This report examines the profitability challenges facing digital banks in Southeast Asia and Africa, explores the rise of super-apps as a strategic response, and analyzes how these trends are reshaping the financial services landscape. We also discuss the implications for financial institutions and fintech providers, and highlight key considerations for building sustainable digital banking systems in these markets.
Profitability Challenges for Digital Banks in Emerging Markets
A McKinsey analysis found that many African fintechs face customer acquisition costs that far exceed the revenue they generate per customer – in some cases spending up to $20 to acquire a customer, but earning only $7 from that customer. This stark imbalance calls into question the sustainability of their business models. Several factors contribute to these profitability struggles:
Despite these challenges, there are notable exceptions. A few digital banks in Asia have cracked the code to profitability. For example, China’s WeBank and MYBank (backed by Tencent and Alibaba, respectively) became profitable within a year of launch by leveraging massive ecosystems and data-driven lending. The 2019 annual report shows The 2019 annual report shows that the revenue was 14.87 billion yuan, and the net profit was 3.95 billion yuan. MYbank’s revenue was 6.628 billion yuan, an increase of 5.7% from 6.27 billion yuan in the same period of the previous year; the net profit was 1.256 billion yuan, compared with 658 million yuan in the same period of the previous year. South Korea’s Kakao Bank also reached profitability quickly by piggybacking on the ubiquitous KakaoTalk super-app platform. These success stories often involve unique advantages – large existing user bases, diversified revenue streams, or strong backing – that most new digital banks in Southeast Asia or Africa lack. For the majority, achieving sustainable profitability remains an uphill battle.
The Rise of Super-Apps in Financial Services
Amid the struggle for profitability, a parallel trend has emerged: the rise of super-apps that integrate financial services into broader digital ecosystems. A super-app is a single mobile application that offers a wide range of services – from messaging and social media to ride-hailing, food delivery, e-commerce, and financial transactions – all in one platform. Asia has become the global leader in super-app adoption, with platforms like WeChat (China), Grab (Southeast Asia), Gojek (Indonesia), and Paytm (India) amassing hundreds of millions of users[https://www.bamboodt.com/digital-banking/]. These super-apps have transformed how people interact with digital services by providing convenience and integration that traditional standalone apps cannot match.
Smartphone displaying “Super APP” with icons for Delivery, Lifestyle, Payment, Taxi, Food, Medicine
Several factors have fueled the super-app phenomenon in emerging markets:
Super-apps have indeed become a dominant force in the financial services landscape of these regions. In Southeast Asia, super-apps are now the primary interface for digital financial services for many consumers. They have effectively blurred the lines between tech companies and financial institutions.
The strategic importance of super-apps lies in their ability to own the customer relationship and data. By being the gateway through which users access financial services, super-apps can capture valuable user data and insights. They can also earn revenue not just from financial transactions, but from adjacent services (commissions on ride-hailing, advertising, etc.), which helps subsidize financial offerings and attract users. This multi-revenue model is a key reason super-apps can afford to offer low-cost or free financial services – they make money elsewhere in the ecosystem. Traditional banks and standalone digital banks, by contrast, often rely solely on financial product margins, which are thinner. In essence, super-apps have turned financial services into a loss-leader or value-add to drive engagement in a broader ecosystem, rather than the sole profit center.
Strategic Responses: Super-Apps vs. Digital Banks
The rise of super-apps has prompted different strategic responses from digital banks and incumbent financial institutions. In many cases, the lines between these players are blurring as each tries to adopt the strengths of the other:
In summary, the competitive landscape is evolving into an “ecosystem battle” rather than just a bank vs. fintech fight. Super-apps are becoming financial institutions, and financial institutions are trying to become super-apps or at least embed themselves in super-app ecosystems. The endgame for many players is to become the primary platform in a customer’s digital life – the one they open multiple times a day. Those that succeed in owning that primary relationship can monetize it through a variety of means (transactions, data, cross-sell) and achieve the scale needed for profitability.
Implications for Financial Institutions and Fintech Providers
The convergence of digital banking and super-app strategies carries several important implications for financial institutions, fintech companies, and the providers who build their systems:
Key Considerations for Building Sustainable Digital Banking Systems
For financial institutions and fintech companies embarking on building digital banking systems in these markets, several key considerations should guide their approach:
In building their systems, financial institutions should also consider the total cost of ownership and ROI of their technology choices. While cutting-edge solutions are important, they must be cost-effective enough to allow the bank to eventually turn a profit. This is where partnering with experienced fintech providers can help – many offer cloud-based solutions on a subscription or transaction-fee basis, which reduces upfront capital expenditure and aligns costs with scale.
Conclusion
The digital banking revolution in Southeast Asia and Africa is at a crossroads. On one hand, digital banks have brought financial services to millions and introduced much-needed competition and innovation in the banking sector. On the other hand, the path to profitability has proven elusive for most, highlighting the need for new strategies. The rise of super-apps offers a compelling model: by embedding financial services into broader digital ecosystems, companies can achieve scale, engagement, and diversified revenue streams that pure-play digital banks often lack. We are witnessing a strategic convergence where super-apps are becoming banks and banks are striving to be more like super-apps.
For financial institutions and fintech providers, the key takeaway is that success will come to those who can balance innovation with sustainability. This means delivering exceptional user experiences, leveraging data and partnerships wisely, and building robust, compliant systems that can scale. It also means focusing on the customer’s entire journey – not just banking transactions, but the full spectrum of their digital life. The “endgame” in this evolution is not necessarily one dominant super-app or bank, but rather a rich, interconnected financial ecosystem where consumers have seamless access to services through the platforms they love. In such an ecosystem, traditional banks, digital disruptors, and super-app operators will all have roles to play, likely as partners as much as competitors.
Ultimately, the institutions that thrive will be those that remain agile, customer-centric, and willing to collaborate. By learning from each other’s strengths – whether it’s a bank adopting the engagement tactics of a super-app or a super-app adopting the risk management rigor of a bank – the industry can move toward a future where digital financial services are both widely inclusive and financially sustainable. In emerging markets like Southeast Asia and Africa, this future is not far off:The stage is set for a new era of finance – one where profitability and inclusion go hand in hand, powered by technology and ecosystem thinking.
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