Jan 18, 2023
7 minutes to read
Customer engagement experts MoEngage share their insights into how mobile finance has become the norm, hastened by pandemic-era changes in consumer patterns.
A year from the pandemic's peak, many verticals are still reeling under the impact, most notably travel and hospitality. But while the pandemic meant a lull for some industries, mobile finance experienced a pandemic-induced surge in adoption.
With more users shifting to digital modes of payment and banking, transaction volumes of mobile banking and trading apps saw a corresponding lift. Finance apps saw over 4 billion downloads between Q3 of 2019 and Q3 of 2020. This indicates the real change in mindset, with consumers prioritizing financial outcomes amid the pandemic-induced economic uncertainty.
Mobile banking and finance apps are also observing never-before-seen levels of usage, ranking just behind weather apps and social media apps for the most used app category on mobile. 46% of users increased mobile banking app usage in the last year alone. 9 out of 10 users now prefer using the app over visiting a bank branch. Unsurprisingly, millennials and Gen Z are driving this behavior change, with close to 68% switching to purely digital banking.
Emerging markets are driving this global growth with low market saturation and a large pool of unbanked users. Consumers are increasingly using mobile phones to carry out transactions to comply with social distancing requirements. Overall growth in the industry, particularly in investment apps, between January and June of 2020, led to a 88% growth in the average number of sessions per day.
Based on the data extracted from MoEngage’s State of Mobile Finance Report, 2021, in Q4, 2020, the downloads of finance apps hit a record high with a 15.2% year-on-year growth. During the same quarter, the sessions for finance apps also saw a healthy increase, as evident from the year-on-year growth rate of 20%.
Not only have sessions and installs increased significantly but also the time spent in-app —customers are using finance apps now more than ever. The average weekly time spent in-app has increased to 57 minutes for finance apps. To put things into perspective, it is 65 minutes for retail and e-commerce apps, 67 minutes for entertainment apps, and 80 minutes for music apps.
Social, gaming, and communication apps steal the show with 131 minutes, 116 minutes, and 102 minutes spent in-app, respectively.
The increase in time spent in-app can be attributed to the overall rise in smartphone usage, which went up by 10 minutes per day during the pandemic compared to pre-COVID trends. Specifically, the time spent on personal finance apps grew by 63%, the highest growth observed during the pandemic. Among all the demographic cohorts contributing to the growth of time spent in-app for the finance category, Gen Z led the charge with a 102% increase, doubling their usual duration.
While the time spent in-app increased for day trading, crypto trading, and mobile trading apps, the rise in session duration for food stamp management apps such as Fresh EBT (152% jump during the pandemic) further reflects the financial hardship brought on by the pandemic.
Growth of payment apps driven by ease of use and spur in e-commerce
A vast majority of markets have observed growth in new installs of payment maps. Apart from the pandemic propelling this behavior, the switch to digital payments is driven by the ease of access and speed of transfer.
Brazil and Argentina lead the way in terms of year-on-year growth in downloads.
Data collected by Visa suggests that e-commerce in South America has peaked, in turn spurring the download of payment apps. The unprecedented pace of e-commerce adoption was triggered by the pandemic and subsequent closure of physical stores. What was once a low penetration market due to a large unbanked segment, logistical issues, and distrust in online payment is now one of the most valued regions.
Increase in usage trends of investment apps backed by renewed interest in improving financial outcomes
With economic uncertainty looming large, one interesting trend across the investment landscape is the renewed interest in managing personal finances. Investment apps observe increasing daily and monthly usage as consumers diligently pursue day trading and crypto trading.
The daily active users grew by 78.8% compared to the previous months of Q4 2020 heading into 2021:
Mobile trading apps, including those that enable consumers to trade in cryptocurrencies, accounted for 35% of the time spent by all consumers on finance apps during the pandemic year.
Increase in new users for lending apps signalling loans going mobile
The growth surge in the number of users opting for loans via fintech lending apps and neobanks shows a convincing case in favor of loans going mobile.
The estimated growth rate for fintech lending in 2020 is 9.1%. The market is poised to reach $291.4 billion37 in transaction value in 2021 and is expected to rise to $396.8 billion by 2024.
Downloads of the top 'buy now pay later' apps have seen a year-on-year increase in Q4, 2020.
Klarna has emerged as the vertical leader, followed by Afterpay, Quadpay, Affirm, and Sezzle.
This growth is driven by low-interest rates, less predatory terms than traditional credit card companies, and lending decisions independent of credit score leading to faster adoption of digital installment plan apps among younger consumers.
Emerging markets driving growth for banking apps
The download trend for banking was in sync with the other sub-segment growth. Starting in the first half of 2020, it continued improving throughout the year and into 2021.
Among the countries analyzed for banking app download trends, Argentina has emerged as the leader.
Unlike the other finance sub-segments analyzed before, banking is largely populated with traditional players who are yet to invest in mobile fully. This could be the reason that banking apps have not grown as much as the other sub-segments.
Now that we have dissected the download, usage, and time spent in-app benchmarks, let's take a look at some of the emergent trends and actionable strategies that brands in the mobile finance segment can emulate to sustain the growth trajectory:
Build trust through social proofing and pre-launch campaigns: Trust is everything for brands in the mobile finance space. To build a brand perception, generating social proof is essential. A properly planned incentives-driven referral strategy can work wonders, bringing in a steady stream of referred users. Brands need to ensure their referral flow is frictionless; studies find removing a new page load improves referrals by 4X.
Segment and run high-engagement campaigns: Instead of running generic engagement campaigns, brands in the mobile finance verticals should segment users based on their attributes (recency, frequency, and monetary value of transactions, financial portfolio, the device used, etc.) to run highly targeted campaigns which engage users better.
Bring personalized recommendations into the picture: We live in a world where customers know what they want and expect brands to provide personalized recommendations, more so when it comes to financial organizations. With more than 77% of consumers wishing to receive personalized financial recommendations, it shows the need for providing personalized offerings across the customer's journey.
Bolster security and safety of customer data: From security checks run by RPA to decentralized, end-to-end security provided by blockchain and AI-enabled fraud detection, customer data safety is the need of the hour. Brands in the mobile finance space need to improve the financial outcomes of the customers and invest in the right technology to do so.
Consolidate customer's financial holdings: Transparency is of prime importance in today's world. The demand from banks and financial institutions now is to provide the customer with a seamless, transparent, and consolidated view of their financial holdings. This will help in reducing debt and improving long-term economic outcomes.
The growth in the mobile finance industry and sub-segments is powered by the need for better financial planning, more transparency in the system, better security and safety, making banking and online transactions faster and easier, and improving the overall financial outcome of customers.
If the emergent trends and download, usage, and time spent in-app metrics are any indication, the mobile finance industry is poised to reach new levels of growth, with the pandemic acting as a catalyst. Building trust, providing more transparency, and data security will be crucial in sustaining the growth trajectory observed by the mobile finance vertical.
About the author
Rajarshi is the Senior Content Marketing Manager at MoEngage. With a specialty in covering the banking and financial vertical, Rajarshi creates and builds insightful content for B2C brands by day and moonlights as a budding high fantasy author. A published author with global and national publications, he can be found binging on classic Sci-Fi when not churning out meaningful content.
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