Columnist

Gold and the rise of the ‘super app’: how fintechs can transform gold investment into a mainstream service

By Sylvia Carrasco, CEO of Goldex

Multibillion pound evaluations for startups often dominate the headlines, but how many of them are actually profitable?

With the Covid crisis putting sustainability into sharper focus, some of the most high-profile businesses in tech and lifestyle have yet to break even. Take Uber for instance: the ride-sharing app that revolutionised the taxi industry lost over $3 billion in 2018, and $8.5 billion in 2019. Airbnb, a similarly famous startup that disrupted the hotel and accommodation sector, suffered losses of $4.6 billion in 2020. While both companies are considered massive successes, they will eventually need to become profitable so that they can continue to exist.

With global economic slowdowns and extended lockdowns across many parts of the world, the companies within the financial sector that were able to come out on top were fintechs that offer a marketplace of services to the consumer.

Starling, a digital challenger bank, is a prime example. The firm enjoyed profitability this year and revenue soared 600% thanks to its breadth of service offerings, notably a boost in SME lending.

Revolut, another digital app that rivals traditional banking, also managed to keep money flowing through the company by expanding its services to include stock trading and cryptocurrencies. In fact, the rise in the value of crypto, which Revolut supports through its trading features, led to a windfall of nearly £40 million for the firm. The expanded product offering was instrumental in boosting its overall prosperity for the year.

These examples outline an important growth strategy for other fintechs to consider: the need to become a ‘super app’ to boost consumer acquisition and retention in a highly competitive sector.

But what exactly is a super app? Effectively, a super app is a platform that provides multiple services, becoming an all-encompassing, self-contained portal to a wide range of products so that the consumer doesn’t have to switch from app to app.

Emma, the budgeting app that has just secured over £3m in funding, recently expanded its portfolio of services to include free stock trading, crypto, P2P payments, high-interest savings accounts and credit scores.

Revolut and Starling have taken similar routes to become sustainable and profitable: they start with their core offering and then expand their services to support their original product.

But when it comes to fintech, building a super app requires an investment in embedded finance. Embedded finance operators make it possible for fintechs to plug in the products and services they want to offer their customers without having to do the build-work themselves.

The apps that make the most of embedded finance then have the potential to elevate to super-app status, offering a wide variety of services that are fast and easy to use. With embedded finance powering the apps they use, consumers can transfer money abroad, apply for a mortgage, or buy insurance – all within one app, without having to switch to any others. The app becomes a multifaceted marketplace, rather than a single-service offering.

So as fintechs look to expand their product depth, sooner or later they will need to offer alternative wealth and investment products. We’ve seen that adding gold to their product is a matter of when, not if. For example, Revolut recently added physical gold to their product offering. And the recent implementation of Basel III has pushed the industry towards physical gold over gold-backed derivatives, and demand for the safe-haven metal has increased by 40% from 2019 to 2020 amid global volatility and uncertainty. In London alone, £4.5 billion worth of gold is traded every day.

That’s why we, Goldex, an allocated physical gold startup, has expanded its product offering from retail investors to businesses. As a multi-dealer marketplace, we recently launched a simple trading integration for financial companies. Through a plug-and-play connection over API or FIX, apps like Revolut and Starling – or any other fintechs with super app aspirations – can offer their customers access to best pricing on physical gold 24 hours a day, seven days a week.

Goldex’s pivot to B2B integrations enables us to capitalise on the huge demand for allocated gold from fintech and operators of embedded finance.

So as fintechs around the world move increasingly toward the super app model, it’s clear that more companies will consider how they can integrate several services together. In order to tap into the full potential of their growth, services that offer investments such as crypto or gold could become the frontrunners of the fintech industry, and retain their competitive edge.

Competition in the super app space is global. Companies are looking for geographical domination and expansion of their product offering. With Covid accelerating digitisation, it’s no longer enough to be the leader in one region, you need to be prominent in several. Fintechs and super apps need to cater to everybody, everywhere, so that they can successfully launch in new regions and be all things to all people. It explains why we’re seeing so many fintechs race to expand their suite of services. It also highlights why gold investment - a traditional, archaic practice that’s being modernised and democratised by the likes of Goldex - is a must-have product on the roadmap for fintechs and the super apps they aim to become.

About Goldex

Sylvia Carrasco is the founder and CEO of Goldex, the fintech gold marketplace solution. Goldex is already working with fintechs directly to become the most convenient option for allocated gold, creating a product that, so far, has no direct competition. Matching a fintech’s pace of ambition, apps can offer their users allocated gold within six weeks.

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