WeChat Gives Glimpse Into The Future of Banking

WeChat provides an amazing example of how the power of integrated products and services, combined with a strong messaging and payments platform, could become the model for the banking ecosystem of the future.

When the discussion around technology, eCommerce and banking comes up, it is hard to ignore the advancements made in Asia. While many point to Alibaba as an example of a new eCommerce and banking ecosystem, WeChat is also often described as an ubiquitous app experience that rules them all. Expanding beyond China, WeChat is now available in more than 25 countries.

WeChat dominates the Chinese mobile market with 1 billion MAUs (monthly active users), having completely evolved the way Chinese people socialize online, from communication to payments. Similar to the most popular social apps in other locations around the globe, users tend to be younger (20-35 age group) and very engaged.

According to Tencent, 60% of users open the app more than 10 times a day, with 21% of users opening WeChat more than 50 times per day. In addition, the average daily time spent on the app in more than 66 minutes, with 17% of users spending 4 hours or more per day on the app.

The presence of WeChat in China is pervasive. A couple of months ago I was visiting Shanghai for a conference, and was looking for a place to stop and grab a bite to eat. Coming upon a quaint little ‘mom and pop’ restaurant, offering what looked like the best local cuisine, I noticed the group of teenagers before me paying through an app that happened to be WeChat.

WeChat As a Tech Leader

WeChat was developed by Tencent at its Guangzhou Research center, and launched to the Chinese market in 2011. Originally known in China as Weixin, the rebranded WeChat app is now deeply ingrained into the daily lives of its users.

The addition of ‘Moments’ was pivotal for WeChat’s growth, bringing a news feed that included updates from friends and contacts – similar to Facebook. Considering that Facebook has 2.2 Billion users, but was introduced in 2004, it is easy to see that WeChat has been a quickly growing app that has BIG potential.

To put it simply, WeChat is a super app, commonly referred to as ‘The App for Everything’. And, as the nickname suggests, WeChat can literally do everything. In a typical day, users can log in, chat with their friends, posts a status update, and check out the local buzz. It contains instant messaging like WhatsApp and is an app store like Apple and Google.

Not impressed? Unlike other apps, WeChat can be used for almost anything consumers want to do online. And, while WeChat doesn’t own all of the products offers, it provides seamless integration between most of China’s most popular apps. Here are a few of the capabilities offered through this rather broad ecosystem.

  • Making payments
  • Scheduling doctor appointments
  • Paying traffic fines
  • Bike sharing (Mobike)
  • Managing Credit Cards
  • Booking transportation
  • Checking crowd density
  • Searching for online trends
  • Making contributions (‘Donate Your Step’)
  • Business communication and tracking
  • Calling landlines or other mobile devices
  • Virtual Reality
  • Purchasing insurances

Dominating the Home Screen of 1 Billion People

Most people find the list of WeChat capabilities pretty impressive. So, let’s get a little bit technical for a minute and talk about how they make all of those features possible. The design behind WeChat is based on the “app within an app” model. Imagine having the basic interface of Facebook, and then inside having all of the capabilities of Apple Pay, Instagram, SnapChat, Spotify, Uber, Google Maps, Slack, Asana, and more.

Put slightly differently, imagine WeChat as everyone having their own website that functions as their profile. On the front end, other users who have your WeChat ID can see what you are posting and other aspects of your daily WeChat use that you have made public. Alternatively, on the back-end of the webpage, you have the ability to access everything needed to make your day-to-day life easier, with the opportunity to share any component.

In addition, users don’t have to download an app to use these mini apps. The apps that reside in WeChat can be accessed by anyone, at any time, avoiding the use of a lot of storage for individual applications.

The success of WeChat is not only expressed by its number of over 1 billion daily active users (over 100 million outside of China). Its true significance can be observed in the streets of Shanghai, Bejing and the countryside. For a lot of users, WeChat has replaced the consumer’s home screen. Most time online is spent inside the app. The earning potential for an app that poses as gate keeper between hundreds of millions of users and companies desiring access to that customer group is priceless.

WeChat’s Killer App

Mobile payments are growing so rapidly in mainland China that it is sometimes difficult to complete basic transactions without it. As mentioned, when eating out or shopping, payments are often made by scanning a QR code on the restaurant table or by showing a similar code on their smartphones to the store clerk. The success of WeChat Pay is attributed to the fact that it’s an extension of WeChat social networking and instant messaging tools.

Within WeChat Pay, there are several options, including the ability to send and receive gifts, pay rent, or donate to a supported charitable causes. The money held within the wallet can also be invested by WeChat.

Not satisfied with just domestic payments, WeChat Pay is expanding globally, leveraging its simple payment process and the massive number of Chinese tourists traveling outside China. Beyond just as a payment tool, WeChat Pay wants to create a lasting link between overseas merchants and their 1 billion users. Chinese tourists can make payments in Chinese yuan and merchants receive funds in the local currency. If the merchant supports social media channels, shoppers can still get promotion and after sales service through WeChat.

“Over 70% of the mobile internet traffic consumed by Chinese travelers in Korea was consumed on WeChat,” WeChat Pay quoted its Korean partner as saying.

The Influence of WeChat Beyond China

It is not exaggerated to say that, WeChat currently dominates social media in China and several surrounding countries. The real impact could be as WeChat expands beyond the traditional borders into more of Europe and even the United States.

Suffice it to say that other social media platforms are fully aware of what WeCaht’s advanced capabilities could mean. Recently, we have seen Facebook begin to incorporate some of the multi-platform features and take their stab at ‘having it all’. It remains to be seen if Facebook can provide the scope of new features before WeChat breaks into its core markets. This defense may be more difficult with recent privacy concerns surrounding Facebook.

In addition, there is a lack of completely seamless integration with some of Facebook’s applications. For instance, the Facebook messaging app has been enhanced to include video chat and voice calling, but instead of still living inside of Facebook, it now exists in a separate app that must be downloaded by the user. This demand discourages users from embracing the new features of Facebook chat instead of giving them a platform to do it all like WeChat.

Instagram has also recently tried its hand in becoming a broader ecosystem by offering chat capabilities and introducing InstaStories. However, they are still light years away from offering features like payment or scheduling transportation.

What Bankers Can Learn from WeChat

WeChat and Alibaba have demonstrated that they can be tech leaders and develop digital products and services that lfar surpass what is being done in most other countries. The second lesson is that it is possible to establish a priceless digital platform and ecosystem – if you have a well-made, consumer-centric product, with amazing features and the audacity to think bigger than traditional companies and even tech giants.

Most importantly, the future of digital engagement is not a single product, service or industry category, but the seamless integration of services that make the consumer’s life easier, delivered on a platform that consumers are willing to make their home page. In other words, banking (or any other category) will most likely run ‘in the background’ of a much broader ecosystem where data and insight is used to benefit the consumer in real time.

WeChat should teach us that the idea of conquering the hearts, minds and home screens of a billion people is possible. In fact, it is desired by the masses. So why wouldn’t a platform like WeChat work in the West? Why not similar solutions in other niches such as fintech, insurtech, reg-tech, brick-tech and others?

WeChat (and Alibaba) provide a view into the future of eCommerce, communication, hospitality, travel, food service, groceries, healthcare, insurance and banking. WeChat offers the promise of simplifying a consumer’s life through technology, and making the frustrations of the consumer’s daily life more manageable.

The future of banking and communication are integrated – and already on display.

This article was originally published on April 19, 2018. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.

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