The Fintech Super App Coming to an iPhone Near You
The Fintech Super App Coming to an iPhone Near You
How Apple opening up its NFC antenna paves the way for financial super apps in Europe
Last week, Apple announced that developers would soon be able to offer in-app NFC transactions, sending ripples through the fintech industry.
While this concept isn't new—Apple said they would open up their NFC antenna back in January 2024—it's gained significant momentum recently.
The potential applications unlocked by this decision are vast, but none stand to benefit more than the challenger banks vying for the coveted "financial super app" status. In this article, I’m exploring why implementing an in-app digiatal wallet is a must for challenger banks aiming to become the go to money app.
As always, I'd love to hear your thoughts. Drop me a reply!
Benjamin
P.S. Interested in learning how you can deploy your own in-app NFC payment wallet? Reach out
Earlier this year, I wrote about the rise of financial super apps and the feature convergence happening within fintech. In the article, I argue that over the last ~5 years, feature after feature fintech apps became increasingly homogenous, to the point of all having a very similar set of features, differentiated only by their brands and fees.
And yet, even though certain fintechs like Revolut are seemingly close to providing every feature one could possibly dream of, it seems that something is lacking. For some reason, the collective consciousness doesn’t label these fintechs as financial super apps but just “neobanks”. That’s like calling a Ferrari a “pretty fast car”.
Now, I don’t claim to know the collective psyche. I live in a Fintech bubble where we geek out over payment innovations and debate whether account-to-account payments will become mainstream.
That being said, I often look at behavior of those around me and look at the hard, cold stats — and here’s the thing:
While neobanks are inching their way into becoming the primary accounts for more people (Revolut, for example, is up 67% in primary account usage in 2023), they haven’t yet reached that magic tipping point malgré their already impressive set of features. There’s still something missing.
Well, that missing piece of the puzzle has just been unlocked.
I’ll explain, but first let me catch you up on an important regulatory decision by the European Commission.
Short Recap of Apple vs. EU
In June 2020, the European Commission opened an anti-trust investigation to assess whether Apple Pay violated EU competition rules. In short, the EU Commission was worried that Apple refusing third-parties access to the iPhone’s NFC payment capabilities was violating competition laws. At the time, Apple Pay was a user’s only option if they wanted to initiate a contactless transaction from their iPhone.
Long story short, following the proceedings, Apple proposed to open their NFC antenna to third parties for in-app, contactless payment transactions in January of 2024. The Commission accepted Apple’s proposition, final commitments were drafted, and the proceedings closed in July 2024.
What’s the Big Deal?
Why is this big news? Well, within the fintech industry (and more specifically the payments industry), this news made waves as it meant developers would be able to build their own apps that compete with Apple Pay.
And why would they want to do that, you ask? Well, because Apple Pay isn’t just expensive—it’s extremely expensive. Every time you tap your iPhone to pay, Apple’s charging your bank a fee. And for big banks, that fee adds up to millions—yes, millions—of dollars.
So, Apple opening up their NFC antenna means fintechs and large issuers can now build their own in-app payment experiences and save a lot of cash in the process. Plus, they can take control of the entire payment experience, which is a key ingredient in the recipe for a financial super app.
But What About Android?
Astute readers might be thinking, “Wait a minute, what about Android?” Good catch. The European Commission’s ruling only affects Apple, because, on Android, third-party access to NFC for contactless payments has been available for a while.
But here’s the thing: It hasn’t really taken off. Why? Because Google Wallet and Samsung Wallet don’t charge issuers a fee like Apple does. So if you’re a bank, why pay extra to implement an NFC payment application when Google and Samsung are giving you the basics for free? The only thing you have to pay is the initial development and future maintenance. Plus, why would you pay to develop a key feature that only affects a subset of your clientele?
Fair questions.
Some issuers have found answers to these questions since they’ve already launched successful in-app NFC payment capabilities exclusively on Android, but the answer has clearly never been generalized.
Some issuers have ventured into Android-exclusive in-app payments, but the uptake has been lukewarm at best. For most, the math simply doesn’t add up. However, Apple’s case is unique. By bypassing Apple’s fees and gaining full control over the payment experience, fintechs now have an exceptional opportunity to create a unified payment experience across both iOS and Android, ensuring a consistent brand image and making the entire effort financially rewarding.
The Opportunity to Become the First Financial Super App in Europe
Neobanks rose to popularity as they completed upended the banking industry, promising a fast and seamless banking experience, rather than a clunky and bureaucratic trawl to open a bank account.
However, their scope (logically) always stayed around banking. After innovating in banking, they moved to investing, FX, credit, etc. Piece-by-piece, they offered everything a bank does, except with a faster and more intuitive experience.
However, doing everything a bank but in a smoother, more agreeable manner isn’t enough to become a financial super app. In my opinion, fintechs that want to become a financial super app, i.e. the “go to” money app, need to become a person’s entire money system.
Personal Money Systems
Personal money system is a term I just made up, but bear with me — it makes sense. I define a personal money system as the complete set of tools and services person regyou regularly use to store money and make payments. Most people’s money systems are a patchwork of different providers that look, at a high-level, something like this:
Let’s break it down:
Physical Money System
On one side of one’s personal money system, you have the physical manner in which you pay and store money, aka a physical wallet. Even though everyone likes to point to the increasing usage of digital wallets, the truth of the matter is that almost everyone still has a physical wallet (or cardholder) for the simple and good reason that not everything can be digitized (yet). So long as I can’t have my ID, driver’s license, insurance card, public transportation pass and payment card in my digital wallet, I will have to carry my physical wallet.
Plus, physical payment cards remain an important element of one’s personal money system. It’s the only physical connection you have to your money (cash aside) and doesn’t require that your phone be charged and working.
Plus, many people (myself included) still rely on physical cards for certain purchases. When I had to shell out 400€ for a new fridge, I paid with my physical card. Whatever their logic, everyone can point to certain type of payments, or payments above a certain threshold, for which they prefer to use a physical card vs. a digital wallet.
Also, paying with a metal card is sleek as hell.
Digital Money System
On the other side of the equation, you have the rest of the system you use to pay and store money: bank accounts (store money and pay), investment accounts (long-term store of money), and digital wallets (payment method). All three of these elements are entirely digital.
Chief among this system is the bank account. I won't labor on the point, but it’s indispensable in today’s day and age. Unsurprisingly, seamlessly providing an easy-to-use bank account is what digital banks do best.
Then, you have investment accounts. Most people have some sort of an investment account, whether it’s a stock broker account, a pension fund, a line of credit for a real estate investment, etc. Offering investment accounts has been fintechs’ expansion path over the last couple years. After all, if you hold a user’s money, it makes sense to help them deploy that capital (and collect fees along the way).
Finally, we have the digital wallet. The only element that isn’t yet provided for by an institutional bank or a fintech, I believe it’s the missing link for a bank or a fintech to have the potential to become a person’s entire money system. As of today, digital wallets enable users to store virtual payment cards as well as some other cards and passes (boarding passes, select transportation cards, IDs in select places, and more).
Physical + Digital Money System = Your Financial Life
Together, these elements make up your entire financial life — or at least the tools you regularly use to manage it. So if one app could centralize all these elements — bank accounts, investment accounts, digital wallet — would it become your go-to money app?
I’m betting yes.
The first successful financial super app will be the one who centralizes one’s digital money system within one app.
Imagine your entire digital money system: your bank accounts, your investment accounts and your digital wallet all centralized in one app. In just a few clicks within the app you can send money to your friends, pay with your phone, invest in stocks, get a loan, all within a few taps, all within the same app. Double-click the side of your iPhone, and the app’s digital wallet pops up, ready to go. Unless you have a specific reason to reach for your physical card, this app becomes your financial life.
This app would quickly become your “go to” money app, i.e. a financial super app.
And it doesn’t stop there. With the relevant approvals, Apple’s latest announcement signalled to developpers that digital wallets could even include closed loop transit, car keys, home keys, corporate badge access, merchant loyalty programs and even event tickets.
What if your financial app also hosted the digital wallet you use to check-in to work everyday, open your car, or obtain coupons at the grocery store?
In that case, this app wouldn’t just be your go-to money app—it’d be the most important app on your phone, period.
But taking a step back for a moment, the ability to include a digital wallet in-app may seem to you like a far reality. Fair enough. And yet, I can assure you that there companies working on this implementing in-app NFC payments as we speak.
However, I should mention that just offering an in-app NFC payment experience is not enough. As per my explanation, the first successful financial super app will be the one who centralizes a user’s entire digital money system. While NFC has been the missing key, it also supposes that all the other systems (investment accounts, bank accounts) and their accompanying features and (send money, FX, P2P, etc.) are available.
What if I don’t have a digital wallet?
I assumed most people's personal money systems include a digital wallet. However, this isn't always true. For example, my sister doesn't trust Apple Wallet enough to add her card to it. Consequently, she doesn't use any digital wallet and likely never will.
For those with different money systems, the principle remains: the first financial super app will be the one that controls most of an individual's personal money system. The absence of a digital wallet in some people's systems simply means that certain apps are already financial super apps for this group. However, if they avoid digital wallets due to trust issues, it's unlikely they'd trust a single platform with their entire financial life.
Indeed, offering every imaginable feature related to one's financial life doesn't guarantee an app's success or adoption. There are many reasons why challenger banks haven't yet won over everyone's primary accounts, chief among them being the lack of trust people have in challenger banks compared to traditional banks.
Conclusion & Next Steps
All in all, I think the possibility by third parties to leverage an iPhone’s NFC antenna for contactless payments is the piece of the puzzle that’s been missing for fintechs to build a financial super app. It was piece of people’s personal money systems that was always out of reach for fintechs. With this piece now in play, I expect that within the next 1 to 3 years, we will see some large fintechs launch with their own in-app digital wallets.
Plus, they have a good reason to do so: they can save millions on fees, control the payment experience and become even more dominant.
However, bear in mind that just launching a digital wallet isn’t enough to be a financial super app. It’s one piece of a 1,000 puzzle. You also need to include FX, investments, loans, P2P payments, wire transfers, budgeting, and all of the other features used daily. Plus, in no way does becoming a financial super app guarantee its success.
If you are interesting in discussing NFC in-app payments, or if you’re interested learning how you can launch your own in-app NFC contactless payment experience, reach out by replying to this e-mail or sending me a message on LinkedIn. The company I work for, Thales, is the leader provider of the necessary technology to launch in-app payment wallet on iOS and Android.