The Week In Payments: Super Apps, Food’s Future And The Expanding FinServ Frontier

Another week in payments ends, and per usual, there’s no shortage of things to discuss as vaccines go out, the road to recovery begins to widen and major players look to position and pivot to prepare for what’s next. It all adds up to a particularly challenging set of circumstances when no one knows exactly what “next” is going to look like, noted Emmalyn Shaw, managing partner at FinTech specialist Flourish Ventures, when she met up with Karen Webster for the latest edition of The Week in Payments.

That's not to say that Shaw doesn’t have a sense of “next.” She said that consumers have had a year to reorient their habits around digital. At this point, those habits are ingrained so deeply that they are unlikely to reverse themselves anytime soon, if ever.

“Today, 70 percent of people or higher are now actually living paycheck to paycheck. [Consumers] care about price,” Shaw said. “They care about stretching dollars. Merchants need to think about how they can think about providing those opportunities alongside convenience, alongside value. Those values aren’t going to change for a large percentage of the population.”

Meeting the rising tide of consumers’ altered habits and preferences is a challenge, and will be going forward. Still, as various innovative players deal with the issues across verticals like retail, food and financial services, meeting consumers in the digital-first economy has become a lucrative opportunity. Case in point: super apps.

Walmart Turning Supercenters Into Super App Play

While there is no shortage of players in the field, Google, PayPal, Amazon and Facebook are more bandied about as Big Tech players with obvious super app ambitions. Walmart is in many ways the standout player in the field, Webster said, owing to its incredibly scaled physical presence.

And Walmart, Shaw said, is also an incredibly old player in the field. Arguably, it is the proto-super-app player in the game, first making a move on a banking license in 2005. And though regulatory circumstances pushed it off that particular ambition, she said, Walmart still had a general goal to create a wider financial services offering.

“Walmart is very specific and thoughtful in its approach to figuring out the natural points of synergy they can leverage. It is very focused on the question of 'how do we really meet customers where they are?' I can’t imagine a better position platform to build from, particularly given the innovation they’ve already deployed,” Shaw said.

It won’t be easy, as Walmart will have a fair amount of work in recreating its unit economics across its meticulously organized supply chain. That is an area where Shaw expects to see “maniacal focus” in the coming weeks and months as Walmart attempts to reconfigure its infrastructure around an expanding collection of use cases. It’s usually incredibly difficult for a brick-and-mortar player to make this kind of move, she noted, but Walmart has the budget and dedication to make it happen.

“It’s going to be very fun to watch,” Shaw said.

Consumers' Changing Dining Palates 

Everybody eats, even in a global pandemic — but as Shaw and Webster agreed, COVID has fundamentally changed how consumers think about the basics. Cookbook sales are off the charts and food delivery has seen a boost, but the far bigger growth has gone to the purveyors of groceries, as consumers decided en masse that learning how to cook was suddenly something worth doing.

The question now is: What happens when the pandemic is over? What happens when restaurants can reopen and consumers can sit down and eat without fear of jeopardizing their health? Consumers do want to dine out again, Shaw said — that is undeniable. But they’ve made fundamental changes to their eating habits and a new commitment to wellness that will likely stick.

“There were a number of behavioral shifts as a result of the pandemic that I think came about,” she said. “We all embraced digitization. I think this notion of curbside and order-ahead, and this notion of actually wanting healthier products — those are pretty profound shifts. There’s also been complexity in terms of the type of products people purchase so they can cook more meaningful, healthy meals.”

That complexity in how we eat, she said, will likely be reflected in how brands work to target them. And the winning recipe is likely to be customized. At the end of the day, if grocers can make the experience more convenient and predict the types of products and services consumers will want, the barrier to adoption will continue to fall, Shaw predicted. “Honestly, I think that is where the push is most profound,” she said.

And that push is also being seen on the other side of the food spectrum in quick-service restaurants (QSRs). In that category, Shaw noted that firms are pushing toward a convenience-centric goal with simple things like self-service kiosks, mobile ordering and curbside service to start developing QSRs' digital service profile.

Technology can play an increasing role in optimizing this, said Shaw, and the time is now to make the right investments in expanding base-level functionality in the space.

The Exciting FinServ Frontier 

Also fascinating, Shaw noted, is the rapid evolution of the financial services space as the demands of the entire market are changing. On the traditional side of the ledger, she said, it's interesting to watch the early innings of players like Citi, Barclays, Goldman and others moving into the digital fray to find more ways to embed themselves in the consumer journey. They are partnering with FinTech players, rethinking enabling everything as a service for consumers, and unlocking more value and opportunity for consumers and small to mid-size businesses (SMBs).

Shaw noted that FinServ players are being pushed by innovative digital challengers who have entered the field and raised the level of their game. In turn, they are being forced to raise their own offerings beyond their original single-solution products. The pressure is on to provide consumers and small businesses with the smooth, digitally enabled, artificial intelligence (AI)-enhanced, automated experiences they want, and to provide a full suite of services — beyond a simple checking account — that consumers need to manage their financial lives. It’s a tall order, but one the market is finding new ways to meet, pushed along by the winds of consumer demand.

“We’re just in such an exciting time in our industry,” Shaw summed up.