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Does Toss’ Super App Strategy work?
Nowadays, everyone has at least one banking app on their phone. There are a large number of banking apps including Toss, Kakao Bank, and Kbank. In addition, most traditional banks including Shinhan Bank, NH Nonghyup Bank and KB Kookmin Bank, have launched their own banking apps in order to stay competitive against Internet banks. These banking apps increasingly gain more users. But what is the number one banking app in Korea? The answer is Toss. Let's find out how Toss reached the top of the list.
Toss is a remittance service app developed by Korean startup Viva Republica. The banking app made it possible to wire money quickly and easily without a public certificate or security medium. Toss can be used by anyone over the age of 14 who owns a smartphone in his or her name. The Toss app was launched in 2015 and became the largest Fintech app in Korea. Fintech is a portmanteau of the words “financial” and “technology,” and refers to the phenomenon in which financial service providers integrate new technologies to compete with traditional methods in delivering financial products and services. It includes payment apps such as Toss, PayPal, and Kakao Bank, investment apps such as Robinhood, and crypto apps such as Coinbase.
To answer the question of why Toss is deemed the number one banking app in Korea, we must first examine its Monthly Active Users. Among the various criteria by which apps can be ranked, the most widely used is MAU. MAU is an indicator of how many people regularly use mobile banking apps. It is the most widely used criterion because the higher this indicator, the more likely apps are to have loyal customers. MAU is a more credible standard compared to regular download rates as the latter includes the number of inactive users who downloaded the app with mere curiosity, while the former represents the actual number of users who regularly use the app. According to big data analysis platform Mobile Index on July 18, 2022, the MAU of Toss reached 14.27 million as of June 2022, maintaining the top position in the financial platform sector. This is an increase of 560,000 from 13.71 million in May 2022. Kakao Bank ranked second with 13.15 million MAU. In terms of MAU, Toss is also more popular than apps created by major commercial banks including Shinhan and KB Kookmin. Commercial banks started providing mobile financial services before Kakao Bank and Toss, but their MAU fell far behind. This is because Toss was the first in the financial industry to launch an integrated banking app, luring those who want to do banking chores with their mobile phones to become Toss users.
Meanwhile, the main reason why Toss was able to become the number one mobile banking app in terms of MAU is because of its super app strategy. A super app is a single application that can perform multiple tasks, and it is nothing new. Super apps have existed in various fields. For example, South Korean second-hand marketplace-to-lifestyle solution provider Danggeun Market offers a hyperlocal super app. It provides all the services that users need in their local area with one app. Although the app started as a platform for users to trade used goods, it now provides various local commercial services such as cleaning, real estate, education, and job instruction. Therefore, it is faster and simpler than search engines when browsing information or services related to the user’s area of residence. The largest super app in Korea, however, is offered by Naver. Users can search, pay, and shop all at once through Naver’s comprehensive app.
As much as Super apps are convenient for users as they do not need to install multiple apps, users may become skewed towards one dominant super app since the need for more than one app becomes obsolete. Therefore, it becomes disadvantageous for companies entering the market late. That is why commercial banks lost their mobile banking customers to Toss. Toss started as a simple remittance app, but has now expanded its scope to the banking and securities sectors by launching Toss Securities and Toss Bank.
Of course, there are banking and securities services in other commercial banks. But there is not yet a banking app that can handle all banking operations at once like Toss. Also, the user interface of banking apps provided by commercial banks are not as convenient as that of Toss. For instance, Kakao, which is considered to be Toss’ rival, launched apps for Kakao Bank, Kakao Pay, and Kakao Pay Securities separately. So users need to install more than three apps to use banking, payment, and securities services. However, Toss implemented its remittance, securities, insurance, and banking services into one application. Users only need to install the Toss app to use banking, payment, and securities services. Of course Toss Bank, Toss Securities, and Toss Payments are separated within the Toss app. However, it is only natural for Toss to have a higher MAU than other banking apps as it has integrated all of its services into one app. In the case of other banks, its MAU is distributed among various apps, whereas Toss’ MAU is integrated into one app. Also, Toss has a longer average monthly app usage time per person, with 2.07 hours, compared to other banking apps such as Kakao Bank, which only recorded 0.4 hours. There are lots of people who are reluctant to install many apps on their phones, and Toss is the best option for them as users only need one app to use all of its financial services.
As Toss became the most widely used mobile banking app in Korea, it was able to attract significant investments and become the first fintech unicorn company–a private startup with a corporate value of more than $1 billion–in 2018. The corporate value of Toss has increased about 10 times since 2018. Toss attracted about 530 billion won of new funds through Series G investment between July and August of 2022, and achieved a corporate value of 9.1 trillion won. In particular, the recent investments received by Toss are more meaningful because they result from the sharp decline in value of the fintech industry as investor sentiment around the world freezes. According to CBInsights, an evaluation agency specializing in unicorn companies, Toss ranked 27th in corporate value among fintech unicorn companies in the world, and 1st in Asia. According to data provided by Nice Rating Information, Korea’s new credit loans logged approximately 9 trillion won in July, and the amount of loans made through Toss was at about 1.8 trillion won. This means that 1 in 5 people who get credit loans in Korea uses Toss. Toss Securities recorded its own 2.3 million MAU, and its overseas stock trading service, launched in December 2021, is growing rapidly.
Finally, to answer the question “does Toss’ super app strategy really work,” it most certainly does. Many users moved to Toss from traditional commercial banks such as Shinhan, Kookmin, and Woori Bank. Also, traditional commercial banks are imitating Toss’ super app strategy. They are updating their apps’ user interface and user experience by including many features in one app. For example, Shinhan Bank launched the banking app Shinhan SOL. Shinhan Bank users can manage deposits, withdrawals, funds, loans, and insurance in one app. Shinhan Bank had 14 apps before the launch of Shinhan SOL. Of course its MAU is lower than Toss, but it was launched three years later than Toss.
Based on its bigger user base, Toss is trying out many new services. Recently, Toss launched the Buy Now, Pay Later (BNPL) service. BNPL is a service that allows users to pay the difference between the prepaid recharge balance and the payment amount later. As The Financial Services Commission granted special cases for innovative finance, Naver Pay started servicing BNPL services in April 2021 and Toss jumped onboard in March 2022. Toss recorded 752,000 cumulative subscribers at the end of August, five months after the launch of BNPL services, surpassing Naver Pay, which had 551,000 cumulative subscribers. According to Toss, “users can use BNPL service at over 70 affiliated stores, including Yanolja, Musinsa, Today House, Yogiyo, and WeMakePrice.” In addition, Toss stated that “through close consultation with the merchants, users can select the BNPL service of Toss on the main screen of the merchants or the order form screen, so there are relatively many user points of contact.”
However, there are some limitations in the Toss app. As Toss focuses only on user convenience, there are many cases where it does not use professional financial terms, but rather tries to explain them in easy terms. This can cause confusion for users. Also, some people found that using the app was more inconvenient than they thought because it was too focused on convenience. For example, Toss doesn't show all the available features in the app; it just summarizes them. It shows the features that users likely need, sometimes making it difficult to use if the user requires other features. Some people are more comfortable with the available options being listed all the time, just like the existing traditional banking apps, even if they have to click a little more.
Despite these limitations, Toss is the most suitable app for users who are reluctant to install many apps and for those who have difficulty handling multiple applications.
Toss is a remittance service app developed by Korean startup Viva Republica. The banking app made it possible to wire money quickly and easily without a public certificate or security medium. Toss can be used by anyone over the age of 14 who owns a smartphone in his or her name. The Toss app was launched in 2015 and became the largest Fintech app in Korea. Fintech is a portmanteau of the words “financial” and “technology,” and refers to the phenomenon in which financial service providers integrate new technologies to compete with traditional methods in delivering financial products and services. It includes payment apps such as Toss, PayPal, and Kakao Bank, investment apps such as Robinhood, and crypto apps such as Coinbase.
To answer the question of why Toss is deemed the number one banking app in Korea, we must first examine its Monthly Active Users. Among the various criteria by which apps can be ranked, the most widely used is MAU. MAU is an indicator of how many people regularly use mobile banking apps. It is the most widely used criterion because the higher this indicator, the more likely apps are to have loyal customers. MAU is a more credible standard compared to regular download rates as the latter includes the number of inactive users who downloaded the app with mere curiosity, while the former represents the actual number of users who regularly use the app. According to big data analysis platform Mobile Index on July 18, 2022, the MAU of Toss reached 14.27 million as of June 2022, maintaining the top position in the financial platform sector. This is an increase of 560,000 from 13.71 million in May 2022. Kakao Bank ranked second with 13.15 million MAU. In terms of MAU, Toss is also more popular than apps created by major commercial banks including Shinhan and KB Kookmin. Commercial banks started providing mobile financial services before Kakao Bank and Toss, but their MAU fell far behind. This is because Toss was the first in the financial industry to launch an integrated banking app, luring those who want to do banking chores with their mobile phones to become Toss users.
Meanwhile, the main reason why Toss was able to become the number one mobile banking app in terms of MAU is because of its super app strategy. A super app is a single application that can perform multiple tasks, and it is nothing new. Super apps have existed in various fields. For example, South Korean second-hand marketplace-to-lifestyle solution provider Danggeun Market offers a hyperlocal super app. It provides all the services that users need in their local area with one app. Although the app started as a platform for users to trade used goods, it now provides various local commercial services such as cleaning, real estate, education, and job instruction. Therefore, it is faster and simpler than search engines when browsing information or services related to the user’s area of residence. The largest super app in Korea, however, is offered by Naver. Users can search, pay, and shop all at once through Naver’s comprehensive app.
As much as Super apps are convenient for users as they do not need to install multiple apps, users may become skewed towards one dominant super app since the need for more than one app becomes obsolete. Therefore, it becomes disadvantageous for companies entering the market late. That is why commercial banks lost their mobile banking customers to Toss. Toss started as a simple remittance app, but has now expanded its scope to the banking and securities sectors by launching Toss Securities and Toss Bank.
Of course, there are banking and securities services in other commercial banks. But there is not yet a banking app that can handle all banking operations at once like Toss. Also, the user interface of banking apps provided by commercial banks are not as convenient as that of Toss. For instance, Kakao, which is considered to be Toss’ rival, launched apps for Kakao Bank, Kakao Pay, and Kakao Pay Securities separately. So users need to install more than three apps to use banking, payment, and securities services. However, Toss implemented its remittance, securities, insurance, and banking services into one application. Users only need to install the Toss app to use banking, payment, and securities services. Of course Toss Bank, Toss Securities, and Toss Payments are separated within the Toss app. However, it is only natural for Toss to have a higher MAU than other banking apps as it has integrated all of its services into one app. In the case of other banks, its MAU is distributed among various apps, whereas Toss’ MAU is integrated into one app. Also, Toss has a longer average monthly app usage time per person, with 2.07 hours, compared to other banking apps such as Kakao Bank, which only recorded 0.4 hours. There are lots of people who are reluctant to install many apps on their phones, and Toss is the best option for them as users only need one app to use all of its financial services.
As Toss became the most widely used mobile banking app in Korea, it was able to attract significant investments and become the first fintech unicorn company–a private startup with a corporate value of more than $1 billion–in 2018. The corporate value of Toss has increased about 10 times since 2018. Toss attracted about 530 billion won of new funds through Series G investment between July and August of 2022, and achieved a corporate value of 9.1 trillion won. In particular, the recent investments received by Toss are more meaningful because they result from the sharp decline in value of the fintech industry as investor sentiment around the world freezes. According to CBInsights, an evaluation agency specializing in unicorn companies, Toss ranked 27th in corporate value among fintech unicorn companies in the world, and 1st in Asia. According to data provided by Nice Rating Information, Korea’s new credit loans logged approximately 9 trillion won in July, and the amount of loans made through Toss was at about 1.8 trillion won. This means that 1 in 5 people who get credit loans in Korea uses Toss. Toss Securities recorded its own 2.3 million MAU, and its overseas stock trading service, launched in December 2021, is growing rapidly.
Finally, to answer the question “does Toss’ super app strategy really work,” it most certainly does. Many users moved to Toss from traditional commercial banks such as Shinhan, Kookmin, and Woori Bank. Also, traditional commercial banks are imitating Toss’ super app strategy. They are updating their apps’ user interface and user experience by including many features in one app. For example, Shinhan Bank launched the banking app Shinhan SOL. Shinhan Bank users can manage deposits, withdrawals, funds, loans, and insurance in one app. Shinhan Bank had 14 apps before the launch of Shinhan SOL. Of course its MAU is lower than Toss, but it was launched three years later than Toss.
Based on its bigger user base, Toss is trying out many new services. Recently, Toss launched the Buy Now, Pay Later (BNPL) service. BNPL is a service that allows users to pay the difference between the prepaid recharge balance and the payment amount later. As The Financial Services Commission granted special cases for innovative finance, Naver Pay started servicing BNPL services in April 2021 and Toss jumped onboard in March 2022. Toss recorded 752,000 cumulative subscribers at the end of August, five months after the launch of BNPL services, surpassing Naver Pay, which had 551,000 cumulative subscribers. According to Toss, “users can use BNPL service at over 70 affiliated stores, including Yanolja, Musinsa, Today House, Yogiyo, and WeMakePrice.” In addition, Toss stated that “through close consultation with the merchants, users can select the BNPL service of Toss on the main screen of the merchants or the order form screen, so there are relatively many user points of contact.”
However, there are some limitations in the Toss app. As Toss focuses only on user convenience, there are many cases where it does not use professional financial terms, but rather tries to explain them in easy terms. This can cause confusion for users. Also, some people found that using the app was more inconvenient than they thought because it was too focused on convenience. For example, Toss doesn't show all the available features in the app; it just summarizes them. It shows the features that users likely need, sometimes making it difficult to use if the user requires other features. Some people are more comfortable with the available options being listed all the time, just like the existing traditional banking apps, even if they have to click a little more.
Despite these limitations, Toss is the most suitable app for users who are reluctant to install many apps and for those who have difficulty handling multiple applications.
