Trends and strategies for finance brands to drive growth: MoEngage

With over 4 billion downloads of finance apps in less than a year, it is smooth sailing for the Indian digital finance industry in the coming times! The post-pandemic boom in adoption observed across the digital finance industry is expected to continue well into the future. As more users are switching to digital modes of payment, banking, lending, and investment, it highlights a real demand. The demand is driven by a renewed interest in improving financial outcomes in the face of economic uncertainty. The continued spikes in transaction volumes of mobile banking and trading apps further corroborate this. In fact, finance apps have crossed the 4 billion mark between September 2019 and October 2020.

Growing demand for mobile banking, payment, and investment fast-tracked by the pandemic

Globally, mobile banking and finance apps rank third in terms of most used apps after social media and weather apps. According to a study conducted by Citi, 46% of users increased their mobile banking usage in the last year alone, with nine out of ten users interested in continuing using the app instead of visiting the bank branch. The millennials and Gen Z  are leading by example, with 68% of users among this demographic planning to switch to purely digital banking instead of physical wallets.

Key segments driving growth in the digital finance landscape

One of the sub-segments driving growth across the digital finance industry is the new-age finance apps, growing at 9.1% in 2020 and poised to reach $291.4 billion in transaction value in 2021 and hit $396.8 billion by 2024. This growth surge further indicates the sheer volume of users opting for loans via fintech lending apps and neo-banks.

Lending

Our stats suggest an increase of 36.3% in daily active users for lending apps.

The monthly active usage follows a similar trend growing at 28.4% in January 2021 compared to the previous months in Q4 2020.

Trading and crypto

A similar growth trajectory can be observed for India's mobile trading segment and crypto trading, growing dramatically. In fact, by the end of December 2020, $60-65 million worth of Bitcoin trades were taking place on an average in the country every day. Home-grown crypto trading platforms reported a stunning growth in user base, with some observing a whopping 4X quarter-on-quarter growth in daily active user base with a 200% increase in investors in just 15 months. This is further corroborated by the growth in daily active users for apps in the investment vertical. The metric grew by 78.8% compared to the previous months of Q4 2020 heading into 2021.

The trend for monthly active users is similar, with a growth rate of 47.3% in January 2021.

In a nutshell, the digital finance industry is scaling at a tremendous rate, with growth coming in from all sub-segments across the board.

Trends that finance brands need to recognize and strategies that can help drive growth

India observed a 37.6% growth in the rate of adoption of mobile payments compared to 81.1% for China, the world leader in mobile payments. The growth can be attributed to the increase in captive audiences owing to social distancing norms. With physical stores shut during the lockdown, adoption improved in not just metros but also smaller towns as users turned to digital platforms for seeking loans and making financial transactions.

This payment behavior is expected to shift further as more users opt for card payments instead of cash. In fact, it is expected that over 65 billion transactions worth $270.7 billion will move from cash to cards and digital payments by 2023, increasing to $856.6 billion by 2030. With digital payments recording a new high, UPI transactions crossed the 200 crore mark in October 2020. It peaked at transactions worth $53 billion in November 2020. Some of India's largest mobile POS network providers observed contactless payments go up from 13% at the starting of 2020 to 30% in the end.

Now, that you have observed the data as well as regional and global trends, as a key takeaway, here are some strategies that will help you continue on your present growth trajectory:

Build trust and social proof through pre-launch promotions

For financial institutions, building trust is everything. This doesn’t happen overnight. Extensive promotion is required to build a brand perception and generate social proof among your target demographic. Having a well-strategized referral plan coupled with an incentives program that ensures a steady flow of referred users can be the growth lever you need. One important thing to note here is that the referral process should have no friction. In fact, eliminating new page load for referrals increases the chances of referral by 4 times!

Engage users better by segmenting and running high-performance campaigns

Today’s customer knows exactly what they want and where they want. Running generalized campaigns won’t cut it anymore. If your user has been browsing for mutual fund investments and offers on home loans wouldn’t be relevant. Create user segments considering attributes viz. device used, recency (and frequency) and monetary value of purchases, event completion among others to design high-performing, and relevant engagement campaigns.

Personalize offerings across all channels and throughout the customer lifecycle

There’s nothing more frustrating for a loyal customer than receiving repetitive marketing emails or notifications for services they’re already using or don’t have a use for. This not only hurts your credibility but also negatively impacts your brand by demonstrating that engagement isn’t really a part of your company’s digital DNA. With 77% percent of consumers wishing to receive a personalized financial recommendation, personalized offerings across all user touchpoints and at each stage of the customer’s journey are of vital importance.

Prioritize vernacular language communication

The country's biggest payment solution providers found that 30% of new businesses coming on board are moving over from traditional brick-and-mortar setups. They have also noticed marked gravitation towards digital payments, especially from tier-II and tier-III cities. Fair to say vernacular language and localization should be the top item of your product roadmap.

Focus on consumer security and fraud prevention

Whether it is running security checks, provide end-to-end security of stored consumer data, prevent fraud and potential theft or help consumers make the right investment and get favorable interest rates on loans, financial institutions need to leverage technology (Robotic Process Automation, Blockchain, and AI) to improve the financial outcomes of the users.

Provide users a consolidated view of their financial holdings

In today’s day and age, transparency and ease of use are of vital importance. Providing the users with a consolidated view of their financial holdings will promote better financial decision-making, lower debt, and improve long-term wealth generation. Open Banking allows precisely that by releasing data in a secure and standardized form for easier information sharing between traditional banks and fintech. Expected to generate $43.15 billion by 2026 at a CAGR of 24.4% from 2019 to 2026, Open Banking will be crucial to your sustained success.

The development in mobile banking, fintech, and financial services ecosystem is driven by the demand for better facilities, access to financial information, transparency, more accessible and faster transactions, secure authentication, and meaningful support throughout the customer lifecycle.

As evident from the usage trends, the industry is picking up momentum, with the pandemic acting as an accelerant. Earning user trust is going to be of vital importance to ensure consistent growth in the future. Building systems that offer transparent experiences, data security and privacy, and alignment with the latest technology, all threaded together by user demand, will be the prime mover in this space.