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Super-Apps Versus Super-Services
4 June 2021
10:00—11:15
KEY CONCLUSIONS
Several companies have announced the construction of ecosystems

There is now a very important limitation – it’s the limitation of this [smartphone screen] and the size of this screen. Basically, there is a battle going on to be present on a user’s first screen. On the first screen, a user may have either very important applications that are rarely used [...] or super-frequency applications that you use many, many times and many hours a day. The problem is that there are numerous services, people have a lot of needs, and the first screen is the only one [...] In fact, all attempts to connect and switch different services into one app and one user scenario are a result of this problem — Tigran Khudaverdyan, Managing Director, Yandex Group of Companies.

We realized that, naturally, we can’t be good everywhere. Because if you try really hard to do it, it doesn’t work and it’s simply impossible. We have chosen some areas where we want to be, which are complementary to our business and the core of financial services – entertainment, travel, content in a sense […], mobile communications, and some other areas. These are the verticals where we should be and should develop our own services, and we have built a kind of super-app around this, [consolidating] these services in a single place — Oliver Hughes, Chief Executive Officer, Tinkoff Group.

Since the discussion here is ‘super-apps versus super-services’, I can say that everyone has, of course, their own challenges […] We have a focus. Super-apps have value or complex value, which they give to their consumer. Everyone will make their own choice. I don’t think the consumer will be the only one. I think the challenges to building a really well-functioning and well-coordinated super-app are huge, and not many people succeed. But there are companies that do it very well — Oleg Tumanov, Founder, Chief Executive Officer, IVI.

Super-apps and super-services will coexist in the future

In fact, banks have now begun to make non-banking services and super-apps of their own. Non-banks have begun making banking services [...] I see advantages in this approach – the fact that a customer can get absolutely everything in one place, but there are also disadvantages caused by the super-app approach, and it’s two-sided. There is a core business. Let’s imagine that we are a banking financial core business and if we provide a customer with non-financial services in our super-app that are not of very high quality, the customer will have to leave my system and also leave my key core business. I would lose the customer due to the fact that I gave him a low-quality additional service. Conversely, [if] I concentrate on making cool, specialized additional services, I lose focus, and my core business suffers. The customer doesn’t like my core business, even if I gave him some additional great businesses. He doesn’t like it and leaves. Super-apps are probably one of the models of the future, that’s very true, but not the only one — Vladimir Verkhoshinskiy, Chief Executive Officer, Alfa-Bank; Member of the Supervisory Board, Alfa Group Consortium.

I believe there is hi-end and there is hi-fi. And it’s impossible to sell hi-end through a super-app, so this niche will always be there […] There will always be certain things that remain outside the ecosystem, and this is great, in fact, because an ecosystem, especially an open one, has a major problem: how do you guarantee the level of quality? And this is despite the fact that most of the suppliers in the super-app are not controlled by the super-app owner — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

We asked respondents what’s more convenient for them to use: to be members of ecosystems or to use various services. Surprisingly, the opinions were split: 50% of customers said they were more comfortable using a single button because it’s convenient and comfortable, and half said the opposite that they want to use different services because they believe ecosystems (or using a single button) force them to use unnecessary services. So, it’s probably obvious today that it’s difficult to answer the question of what will win out […] I can hardly imagine how in Europe it will be possible to use a single ecosystem or a single button. I think that, depending on the needs of customers, consumers will choose multiple services that they like. So, I believe that in the future both of them will probably exist — Igor Shekhterman, Chief Executive Officer, Х5 Retail Group N.V. .

As for super-services or super-apps, I don’t believe there is any ‘or’ at all. If a company is able to offer a good additional product to its customer, and the customers like it, then the company develops that in that way, adding new services. This happens with all organizations. There are numerous examples of this — Alexander Shulgin, General Director, Ozon.

ISSUES
Ecosystems form around banks, which poses risks for depositors

We are worried about two things. The first one is venture for banks that are not at all going into banking history. If it’s a venture, it’s not entirely clear whether it’s right in terms of risk to allow investors to implement venture projects with money. And, of course, it would be much more comfortable for us if this was done with the money of these banks’ shareholders, but today the reserves are built in such a way that there is no deduction from the capital. Sure, capital is somewhat being located for ventures, but this is not 100% — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

Monopoly position of super-apps

The important thing is that once a system becomes really large, how does it treat the participants in this system? Does it impose any conditions on them so that they have nowhere to go or not? Harnessing market power is the only thing that matters — Alexander Shulgin, General Director, Ozon.

Any company wants to become a monopoly. You can’t punish a company for this somehow because this is a natural desire of business – to take the whole wallet and all a person’s time. But the state, and that’s its role, establishes such rules of the game that no one can succeed in doing [this]. And the state determines what is abuse and domination. The state determines whether it’s possible or impossible to combine a particular activity within a group of persons or a single person [...] Now, as we enter the business models of ecosystems, we are feeling around for these approaches [...] These are the rules of the game that the state should set — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

The most important thing here probably is to make sure that the development of super-apps or ecosystems does not lead to the creation of a monopoly […] When there is no choice, this leads to the creation of a non-competitive environment, when new players who can grow from startups to super-services or eventually into super-apps lose out. The question here probably is how it will develop over time and how it will be regulated — Vladimir Pravdivyy, Chief Executive Officer, Avito.

It’s very important that the super-apps that are being developed by super ecosystems, which, for certain reasons, have attained a monopoly position or something close to a monopoly position on the market, do not abuse this monopoly position and do not grant huge unilateral advantages only to their service — Oleg Tumanov, Founder, Chief Executive Officer, IVI.

SOLUTIONS
Develop partnerships

As a rule, I believe that future development lies in partnerships. At X5, we are definitely in favour of open partnerships. In this case, I’m confident that in order to survive and compete in today’s world, food retail will have to partner or merge with either non-food or digital players — Igor Shekhterman, Chief Executive Officer, Х5 Retail Group N.V. .

[A joint venture] does not work well in Russia, as we all know here. Many of us have tried different JVs, and they didn’t work either. As a cumbersome legal structure, it’s generally a bad thing in Russia. But there are other forms of partnership, and they work very well. They may not be as well developed as we would like if we compare a partnership here with other markets, in particular, in Europe [...] Of course, there are many different partners with varying degrees of depth, and you can partner with anyone. It’s easier [...] But it’s developing in Russia, and here the existing players and numerous others need to partner up, I believe, because you can’t be good everywhere [...], so you have to choose who to partner with, and you have to develop these partnerships — Oliver Hughes, Chief Executive Officer, Tinkoff Group.

Now is the time when the quality of service and customer satisfaction are truly a sustainable investment, a profitable solution, and a competitive advantage. We are betting on this ourselves, and we understand that we cannot and will not be able to offer super-services in areas that are not core to us. We will make a financial super-service with the highest level of quality and as partners. In order for our customers to receive content, video, and other services, we will simply choose the best partners on the market — Vladimir Verkhoshinskiy, Chief Executive Officer, Alfa-Bank; Member of the Supervisory Board, Alfa Group Consortium.

Support competition

I am very glad that there is such a variety of both digital players and offline players on the Russian market because, in principle, the more competition, the better it is for our customers. And the customer will definitely benefit from this — Igor Shekhterman, Chief Executive Officer, Х5 Retail Group N.V. .

Ultimately, all services are repeatable, and competition means that no matter whatever we do, others will do at least the same, so we must always move forward and develop. I believe this applies to any company — Alexander Shulgin, General Director, Ozon.

I think there are three main pillars that determine demand for a product: quality, time spent on purchasing it, and its price. Each brand actually is a reflection of this proportion. Ultimately, I agree with [Yandex Group Managing Director Tigran Khudaverdyan] that everyone is competing for a person’s time and wallet. The very emergence of super-apps is a diversification of your own business [...] At any rate, you will get your share of the wallet — Sergey Shvetsov, First Deputy Governor, Bank of Russia .