Why do Financial App Users Churn? 10 Mistakes to Avoid When Creating an App for the Finance Sector
In the 3rd quarter of 2020, there were 2.87 million apps available in Google Play Store and 1.96 million apps in Apple App Store according to Statista.
That's quite a lot, right? But at the same time data indicates that the average mobile app retention rate is only 29 percent after three months.
That means 71% of all app users churn within 90 days. Furthermore, Gartner predicts that within four years of launch, less than 0.01 percent of mobile app creators will consider their app a financial success.
With these figures in mind, we invited experts from the finance sector to share their stories and experience with launching a fintech app.
We reached out to CTOs, Product Design Managers and leaders in both top finance companies and financial service providers and asked about their best practices. Here’s what we learned.
Mistakes to avoid when creating a fintech app
Monica Millares, Head of Product Experience at BigPay
Most apps are built around a product features ecosystem or even customer needs – but users don’t really care about products, they care about their lives. Banks and fintechs are doing a great job of putting customers first and being user- and experience-centric; however, as an industry, we still need to crack the code on how to build apps that fit into people’s day-to-day lives in a seamless way.
When we see a significant shift in users’ mindsets around their finances from “personal finances are difficult or a chore” to “this product helps me improve the quality of my life – hence I want to invest time in my finances”, then we’ll have made real impact, and churn will be a thing of the past.
David Germain, Group UK&I Chief Information Officer at RSAThe development of financial applications is still relatively immature. Converting traditionalism to a more digital tech-infused channel designed for convenience is at the forefront of most organizations’ digital transformation journeys. All modern technologies have an Achilles heel; in part due to the level of user expectation for a faster, simpler and secure environment.From personal experience, these are some of the common pitfalls to avoid when developing financial applications:
- Customer behavior. Do your research. Understand your customer demographic and how they want to transact. Ideally, those on the tech side should work together with product teams who understand customer behavior patterns. Therefore teamwork is required to cover everything from performance, security, stability, transparency, and regulations to reliability.
- Security. Design at the outset how you will to encrypt and protect personal information agnostic of location. Biometric identification is now commonplace, specifically facial and fingerprint recognition. Consumers like to satisfy themselves with the level of security/trust before they decide to use an app. There are plenty of options and benchmarks.
- User experience. Keep it simple, easy to use, flexible, intuitive, reliable, well-organized, and with no repeated actions. Only incorporate worthwhile features. The more cumbersome the application, the lower the take-up.
- Data cleansing. Have a clear strategy on the type of data to consume and ensure you are not duplicating records. This could cause performance bottlenecks and create complications for scaling up the application.
Vasundhara Chetluru, Co-founder at Pebbl.ai
A key takeaway from our experience at Pebbl.ai so far is that bait and switch tactics don’t translate to user retention. The one-size-fits-all solution is a myth. Personalized and intuitive user experience is the key to building a sustainable user base.
Empowering the user with tailored tools to make informed choices in securing their financial future will lead to a long-term mindset change in the market.Our philosophy at Pebbl.ai aligns with this quote from Richard Buckminster Fuller, “If you want to teach people a new way of thinking, don’t bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking”.
Saleem Arshad, Chief Technology Officer at W1TTYFinancial apps are fast transforming from being basic banking apps to super apps that aim to provide customers with a one-stop-shop for all their financial needs. This is a catch-all solution to net a wide base of customers. However, if the fundamental objective of the app is not met, it will cause a lot of frustration among users resulting in them moving to other apps.My top 5 tips for an app:
- Right features. Who are your target users and what features should you offer them?
- Customer journey. Is the user being inundated with unnecessary information that makes basic tasks hard to perform?
- User experience. Nothing can be more annoying than a sluggish app that takes forever to load and is clunky to use.
- Security.The app must be safe and secure to use.
- Accessibility – Ensure the app is inclusive, catering to people with people with disabilities, such as hearing or eyesight problems.
Jason Latham, CIO at Hay Limited
When a user grants you the privilege of participating in their financial life, that is a sacred trust you must take very seriously. Financial apps grant you much less leeway to test and learn because if you get things wrong from a trust perspective, then you are done before you get out of beta.
There is a temptation to build an app quickly to target just the part of the value chain you are interested in and cut corners on everything else. Whilst this may allow you to take new products to market at a lower cost, it is fraught with technology and business risks and will cause a more prolonged phase from trial to live. If you really believe in your idea, do things right from the start.
Manish Kumar, Head of Product Management & Delivery at Tyl by Natwest (part of Natwest Banking Group)
Easy and seamless navigation is critical and should be supplemented with instructions and tips to ensure maximum app feature utilization. Effective, personalized targeting via push channels and mobile in-app notifications delivered at the right times is imperative to demonstrating to users that the digital product is worth their time and money.
Martin Parzonka, Head of Product at PensionBee
The financial sector needs to ensure it meets the customer at the point where and when the customer wants to engage. In the same way many people will likely never step foot in a physical bank branch again, non-bank financial services will need to remove any barriers to customers wanting to interact with their accounts, so no paper forms, and no need to call a number to speak to customer service.
As much as possible, transactions information and actions and interactions need to be readily accessible, in the palm of the customer's hand. Accessibility is key to any positive customer experience.
Russel Luis E Fernandes, Head of Product-Card Present Payments at Trust PaymentsLoads of financial services companies are keen to launch products at pace without doing the bare minimum – adequate testing. There needs to be an adequate amount of automated tests with defined exit criteria and KPIs before shipping a product.Financial services companies spend loads on hiring experienced product managers, UX/UI designers and engineering teams, but fail due to inadequate testing, which results in substantial revenue losses and loss of customer confidence.
Christian Wöhlke, Head of Product at Bitwala
One of the biggest and most common mistakes I have seen in the past is that players that build new apps (traditional financial institutions but also fintechs) focus way too much on the financial product that they want to distribute. By focusing exclusively on the financial product (e.g., a consumer loan) and ignoring the customer journey, the user experience often feels unrelated, frustrating, and unappealing.
Add to this a lack of understanding of what the user wants to achieve with a specific app/financial product, and you have the perfect recipe for low activation and nonexistent retention. To be able to build successful apps for the financial sector, organizations need to focus on the user journey and stakeholders must understand how a specific app or a specific financial product can solve real problems that users face.
Baf Kurtulaj, Independent consultant
- Poor UI design
The first principle for any app is that it should be designed with clear intention and be easy to use. Poor structure and inconsistency are some of the main reasons that user churn remains high for fintech apps, and not just that, but you will fail to attract your target audience and, even worse, you might get a bad review.
- Poor UX design
The second principle is to want your users to have a great seamless experience using your app. What if your app is too complicated for new or existing users to use? In fact, this is one of the main reasons why users churn. The same applies if other users find your app too basic. It's striking a balance but that balance can only be reached if you spend time knowing who your users are and what problems they want solved. It's your job to create the feature that relieves their pain points.
Introducing a new app, especially in such a crowded market as financial services, is quite a challenge. Hopefully this article will help you avoid the most common pitfalls so that you can create an outstanding fintech solution, get it to the market faster, and delight your future users with seamless experiences.