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  • Writer's pictureKristopher Kovacs

The Super App vs. Companion App Strategy: Which is Right For Credit Unions?

By Kristopher Kovacs, President & CEO, Constellation Digital Partners

Credit unions continue to invest heavily in their digital transformation initiatives, and they want to make sure that they get those investments right. As more and more functionality is developed and delivered to members within the mobile banking channel, credit unions will inevitably hit a point when they must decide whether to embrace a single “Super App” approach or go with a multiple “Companion App” strategy. The reality is that we have seen clients be successful with both approaches, and the answer to which is best is often different for different credit unions.

The Rise of the Super App

Kristopher Kovacs

Recently, the concept of the super app has garnered much attention as technology companies, online retailers, social media networks and financial institutions, among others, attempt to make their mobile application serve as a “one stop shop” for consumers. In retail banking, this means bundling all of a credit union’s services, along with those of its fintech partners, within a single mobile app. The thinking being that if members can manage everything from basic banking functions (balance transfers, check deposit, bill pay) to adjacent services (subscription management, P2P payments) to wealth management and financial wellness programs, to consumer, auto and/or mortgage lending – even business banking – then this effectively supports member retention by bringing what might have been a handful of disparate applications on a member’s mobile device all under the credit union’s single app.

In principle, this makes a lot of sense, and in some cases, it is the right strategy for a credit union to adopt. By bringing more services under one application – and effectively building a digital wall around that member -- super apps should encourage higher levels of member engagement and loyalty while mitigating competitive threats from fintechs and other institutions. The key to all of this, however, is that the success of a super app strategy hinges almost entirely on the quality of the member experience. And since there is no single, uniform member experience preference, therein lies the problem.

Different types of members often want different types of experiences and too often we see credit unions struggle to provide that level of flexibility through the super app approach. Where Boomers and Gen-Xers may prefer a more traditional home screen presentation, featuring individual account balances and a pull-down menu of services that link to separate pages or screens, Millennials and Gen-Z typically want none of those things, instead preferring to scroll down or swipe right through a more personalized, graphically enhanced experience. Even communications preferences differ greatly, with some generations preferring branch, email and/or phone and others preferring video chat and/or text.

For some credit unions, though, a super app strategy is the right approach. Particularly for credit unions that have a more homogenized membership base (characterized by a specific profession, industry, age group, etc.) who, for the most part, utilize the same core functionalities in similar ways, a super app provides a centralized, secure, consistent member experience.

The Companion App Approach

For those credit unions that serve a more diverse membership base (different age groups, economic levels, professions, etc.), they may want to consider a companion app strategy. As consumers, we see successful examples of the multiple-app approach all the time, notably through companies like Facebook and its separate Facebook Messenger application, as well as its separation of Instagram and now, Threads. YouTube is another example, with YouTube, YouTube Music, YouTube TV – all providing different services under the unified YouTube brand. Some of the larger banking providers are now also providing separate services for their different user personas. For example, JP Morgan Chase has six separate apps in the Apple app store while Bank of America is currently offering 13. This is a model that consumers are already very familiar with.

For a credit union that serves multiple generations of a single family, for example, there could be a standard mobile banking application for parents and grandparents and a companion application for college or high school-aged children and grandchildren. Other potential divisions include separate solutions for retail and commercial members or services specifically intended for indirect borrowers.

Companion apps can also prove useful in testing new services or introducing specific member service programs and can generate more focused data analytics for use in marketing and advertising campaigns. Often it can be difficult to integrate new services into legacy solutions; a companion app can be an effective way for the credit union to deploy new services outside of their digital provider's project schedule and roadmap. However, it is critical for credit unions to have the ability to quickly deploy, test and measure the use of new services as they work to match the agility of the increasing consumer demand. Making The Right Choice

Ultimately, the decision about which path to choose – Super App or Companion App – should be based on each credit union’s evaluation of its own business strategy, membership base characteristics, product mix and long-term strategic goals. What might be the best approach for one might not apply to another.

As an industry, credit unions recognize the existence of an aging membership base and the need to attract younger generations as new members. Repeatedly, data has indicated that Millennials and Gen-Z are much less brand loyal to their parents’ financial institutions and are much more likely to switch providers based almost exclusively on the quality of the digital user experience, so a lot is riding on how well – or poorly – credit unions do in this regard over the next few years.


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