Connecting the Dots: Navigating Tomorrow’s Services through Ecosystems

In recent years, there has been a growing trend among companies across different sectors to build ecosystems or even super-apps. These ecosystems typically include a range of services and products designed to meet the diverse needs of consumers in their daily lives. While each company may approach this from a different angle, their ultimate goal is the same: to create a one-stop-shop for all their customers' needs.

One of the most notable examples of this trend is observed in the tech industry, where companies such as Amazon, Apple, and Google have created vast ecosystems that encompass everything from e-commerce, cloud computing, and financial services to entertainment. These companies have leveraged their existing strengths to expand their offerings and provide a seamless experience for their users. For instance, Amazon Prime offers not only fast and free shipping but also access to streaming music and video content, as well as discounts on groceries and other products.

However, it’s not just tech companies that are building ecosystems. Traditional retailers are also getting in on the action, with companies like Walmart and Target creating their own platforms that offer everything from groceries to clothing to home goods. These retailers are leveraging their existing brick-and-mortar presence to establish an online footprint, enabling them to reach a broader audience and offer a more comprehensive shopping experience.

Similarly, financial institutions are also entering the game. Many banks now offer a range of financial services, such as daily banking, loans, insurance, and investment management, all within a single platform. This allows customers to manage their finances more efficiently and easily, without having to navigate multiple different apps or websites. Some banks, like KBC in Belgium, go even further by offering various third-party services, such as mobility, shopping deals, entertainment and accounting and legal services. In this category, we can also include BNPL (Buy Now, Pay Later) players like Klarna, who aim to provide an all-inclusive "Shopping app" offering features such as a marketplace of shops accepting Klarna as a payment method, exclusive deals, delivery tracking, and hassle-free returns.

Telecommunication companies are also increasingly partnering up, offering entertainment deals, packages with streaming services, financial services (e.g. Orange Bank or the Beats cooperation of Proximus and Belfius in Belgium), phones and other electronics linked to their telecommunication services.

And then there are the mobility companies like Uber and Lyft, who are looking to create ecosystems that extend beyond ride-sharing to areas such as food delivery, bike rentals, and even healthcare services.

While each company may operate in a different sector, they are all converging towards the same goal: creating a comprehensive ecosystem that offers a wide range of services to their customers. This convergence is driven by the desire to provide a more seamless and efficient experience for users, as well as the potential for increased revenue and customer loyalty.

In Asia, this trend has led to the creation of super-apps, such as Tencent’s WeChat in China, AliPay in China, Grab in Singapore, Go-Jek in Indonesia, Zalo in Vietnam, Paytm in India, Kakao in South Korea, and Line in Japan. In Africa, M-Pesa is also evolving into a super-app and of course Elon Musk is also working on a similar concept with X, targeted at the US and Europe, where super-apps have not yet gained significant traction.
A super-app is a closed ecosystem offering a seamless, integrated, contextual, and efficient user experience. It is a multifunctional platform that consolidates diverse services within a single application, enabling users to perform numerous tasks without the need to switch between apps.

In the future, we are likely to see even more companies from various sectors embracing the ecosystem trend as they strive to remain competitive and meet the evolving needs of their customers.

When executed effectively, an ecosystem can be a win-win-win for all parties involved: the central party managing the ecosystem, the third-party offering the specific service, and the customer.

Ultimately, it all boils down to where the user is active and where they initiate their journey. Large players with substantial customer bases and high user activity can position themselves at the center of the ecosystem, while other players are more likely to offer their services in an embedded manner.

Choosing the right strategy is crucial for every party involved. Several large companies, such as social secretariats managing payroll for businesses (e.g. SD Worx, Acerta or Liantis), insurers (e.g. AXA, Nationale Nederlanden or AG Insurance), payment apps (like Payconiq, Venmo or Paypal) and telcos (like Proximus or Telenet), are striving to be at the center, investing significantly in feature-rich apps with a wide array of added-value services. However, this strategy is inherently risky and uncertain, as these companies, despite having a large customer base, typically experience low customer engagement. For example, insurers usually interact with their customers only at the inception of an insurance contract and during claims. Insurers might regret this lack of user engagement as it results in missed cross- and up-selling opportunities and less customer loyalty. However, changing this dynamic might entail too much effort compared to the potential reward. Therefore, for these companies, opting for an embedded approach might be more rewarding.

Nevertheless, this embedded approach also carries the risk of even less direct customer contact and a growing dominant position of the ecosystem provider, who could decide in a matter of days to replace your service with a competitor, potentially breaking your business.

Many companies will need to find the right balance between targeting a direct digital customer relationship versus an indirect, embedded one. Most likely, a hybrid approach will yield the best results, providing a direct digital experience for core functionalities in which the company can genuinely make a difference and add value, while embedding all non-differentiating functionality.