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Are WeChat-type super apps the future of banking and FinTech?

  • What is WeChat and why does it matter?
  • The future of FinTech?
  • A disruptive force and a game-changer – and that’s great news

China’s WeChat – Weixin if you speak Mandarin – is shaking up global financial tech (FinTech), even before it spreads much beyond its home country. A super-app used by at least a billion people every month, it allows users to chat, call a taxi, access social media, buy tickets, pay bills, get directions, book a doctor’s appointment, send money, and pay for daily purchases, all from one seamlessly integrated platform. As a result, it’s been called a lifestyle app, and anyone in China will explain that it’s a necessity if you want to get anything done. As Ben Thompson writes for the Verge, “For all intents and purposes WeChat is your phone, and to a far greater extent in China than anywhere else, your phone is everything.”

And since it enabled mobile payments in 2013, mostly transacted by scanning a QR code, it’s become the dominant form of payment in China’s major cities, quickly transforming Chinese society from cash-only to mobile-please. Chinese society skipped credit cards entirely: just 2 per cent of people opted in. That’s important because WeChat’s rapid development of mobile payment has outstripped everyone’s expectations, and it shows the way forward to a new era of FinTech that doesn’t rely on tradition. That has everyone from the banking industry to Facebook watching closely, and they’re worried about what this means for them.

What is WeChat and why does it matter?

To really understand this trend and its impact, you need to take a closer look at this super-app. First unveiled in 2011, WeChat has enjoyed a cozy relationship with the Chinese government, from whom it receives subsidies and protection from competitors. Western apps are banned or censored: Facebook Messenger, Line, and WhatsApp are crushed by the government, creating plenty of space for the growth of WeChat. And grown it has – now sporting more than a billion users and reaching 93 per cent saturation in China’s major cities.

A close-up picture of a smartphone with the WeChat app icon displayed on its screen
First unveiled in 2011, WeChat has enjoyed a cozy relationship with the Chinese government, from whom it receives subsidies and protection from competitors.

But even this heavy-handed help doesn’t explain WeChat’s popularity. Instead, you need to look at its incredible functionality. WeChat is good at everything, literally. As Dong Jian explains, “WeChat is in all parts of my life. I use it from morning to night, mainly the chat and payment functions, but also to see how my friends are doing. I use it to order food, call a taxi, buy movies and train tickets and pay my utility bills. I also follow the official accounts of other companies that are in the same industry as mine. Honestly, I have no idea how many times I use it each day because it is integrated into my life. There is no other app that is as widely used by all my friends.” As he makes clear, WeChat has found its way into every facet of Chinese life. It’s an essential tool, a must-have, and that’s because it works so well for the things we all need.

The future of FinTech?

In the West, when you want to pay for dinner, chances are you reach for your Visa or Mastercard. In China, you reach for your mobile, scan a QR code, and WeChat pays the bill from your linked bank account. It’s just as easy to send money to a friend. And that seamless, cashless, hassle-free ease is the future of FinTech, make no mistake.

Credit cards are clumsy, easy to lose, and essentially just old tech. Mobile payment is the future, and since you’re carrying a smartphone with you anyway, soon, there’ll no longer be a need for a wallet or purse, either. If mobile security and digital privacy can make the leap forward – and we bet they can – we’re pretty sure that WeChat is a glimpse of the future of mobile banking.

And WeChat shows Western tech companies like Facebook that even their supposed dominance falls far short of what’s possible. It’s not just that so many opt for WeChat in China, and increasingly elsewhere, too, it’s that WeChat is just that useful. When one app can do everything you want, why wouldn’t you sign up? And unlike clumsy efforts like your bank’s to enable peer-to-peer payment, WeChat offers 21st century convenience and simplicity.

A disruptive force and a game-changer – and that’s great news

That has banking groups like ING eyeing the future with concern. First, the pace of digital saturation has now outpaced its financial equivalent, meaning that more people have smartphones than bank accounts. That sets up a potential market imbalance in favour of the new tech players, and traditional banks are worried. Second, if Western users start to warm to mobile payment systems, they may well drop their current reliance on credit cards, and that has Visa and Mastercard concerned, too.

WeChat’s incredible popularity and seamless functionality are the future. And whether traditional banks and credit card companies can keep up has yet to be seen. What’s clear at this point is that WeChat is showing every sign of being a major disruptive force, a herald of the future of mobile banking and FinTech.

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