From HardBank to SoftBank: Mobile Finance today
By: Abhinav Kejriwal
Tags: Mobile, Technology, Apps, App Development, Finance

Chances are that you don’t physically walk to a bank to pay your friends for dinner; instead, you Venmo them. Chances are that you also don’t carry cash; instead, you pay through a mobile app or your cards. Chances are also that you invest money or trade stocks, all through your phone. Your bank, then, is not a brick-and-mortar bank. Rather, it is in your pocket; your bank is your phone.

In essence, mobile finance has flourished and its growth rate is startling.

In the past five years, user activity on finance apps has jumped by 354%; in 2018, finance apps were downloaded over 3 billion times globally; and in 2019, analysts predict that, for the first time, mobile would outshine desktop as the medium of choice for finance.

These trends show the extent to which finance has disintermediated traditional, brick-and-mortar banks and has pervaded the mobile application landscape. With powerful and convincing use-cases like keeping track of expenses, transferring money, or even trading stocks, mobile finance has democratized access to money and capital.

Given the strength of the financial space, if you are aspiring to enter the arena and release your own mobile finance app, there are three key considerations you’ll have to make when designing and marketing your product: conversion and retention, platform, and region.

Conversion and Retention

Two metrics are crucial to measuring the effectiveness of your application at drawing-in users: conversion rate and the retention rate. A “conversion” is when a user performs a specified action, moving from one state to another (for example, installing the app to registering and making the first purchase). “Retention,” on the other hand, measures how often people return to the app or complete an action after installation (for example, taking out a second loan after paying back the first or making a second money transfer).

While conversion and retention can be applied broadly, let’s focus on how they relate to the onboarding funnel where a conversion is an installation becoming a user and retention refers to how often users return to the app.

Beginning with conversions, a recent LiftOff report found that the average time for a user to finish a registration after the installation was 5 minutes and 47 seconds. Depending on your goal and use-case, you may think of this as relatively fast or slow. Irrespective, though, successful mobile apps aim to keep this time as short as possible. If your conversion rate is too long, you run the risk of demotivating users.

Once registration is complete, the next step is to activate a user (a.k.a have them actually use your app). On average, a user takes an hour to activate after registration. This number is complicated if broken down by gender. Women take an average of 27 minutes to activate, whereas men take 3 hours. While, in general, activation times depend heavily on the nature of the service that your app is providing, we suggest you still be sure to take this into account when setting your benchmarks.

Once the user has used your app once, you want them to keep them using your app. Relative to other app genres, finance apps have extremely high retention rates, so this should not be an uphill battle. That said, however, most mobile-banking users don’t use all features present in the application. This suggests that creating a small set of high-impact, easy-to-use, and easily available features is a strong strategy for a high retention rate.

Platform

Unless you have a large development team or know cross-platform development, one of the first considerations you will have to make is the platform you want to serve: iOS or Android.

Reports suggest that, in general, iOS users tend to be wealthier than their Android counterparts. Accordingly, they spend more on financial services and in-app purchases than Android users. That’s the upside. The downside, however, is that iOS users are relatively expensive to acquire, with an acquisition cost of $8.58 as opposed to $5.15. This extra cost is balanced out, however, by higher registration and activation rates (27.5% install-to-activation rate for iOS vs 12.3% for Android). When choosing your platform, keep in mind both the short-term and long-term tradeoffs that will arise out of this situation.

Consider region as well. While iOS has 40% market share in the United States, it is losing its market share in Europe, not to mention small penetration rates in Asia and Africa. Simply, then, if you are developing a finance app for non-American users, Android might be a smarter bet.

Region

One of the best parts of mobile apps is that you can serve customers anywhere in the world; you are not limited by your physical location. This makes the primary region you are choosing to serve an important factor for designing, marketing, and developing your app. The Liftoff report highlights three regions in its analysis: APAC (Asia-Pacific), EMEA (Europe-Middle East-Africa) and NA (North America).

Each of these three regions comes with its own character. As a more mature market, North America is highly competitive and lucrative. EMEA, with its diverse set of countries, has varying speeds for its different markets. Africa, however, having moved straight into the digital age, is ripe with users looking for access to capital and other financial services all through their smartphone. Likewise, with its large populations, APAC is the fastest-growing region and the least expensive ($20.67 install-to-registration cost instead of $46.86 in North America). However, if you decide to join one of these markets, you may have to compete with large “super-apps” such as WeChat in China and Paytm in India.

But above all, the essence is that the largest growth in finance apps is occurring outside the United States. Since 2016, the number of finance app downloads in India has grown over 200%, seconded by Brazil with a growth rate of over 100%.

Different countries have different needs (and different regulatory landscapes), so, there naturally exist several unique market gaps that are distinct from those in the U.S or North America.

Conclusion

As you begin the process of finding a niche for your application, be sure to think carefully through your target market and the design of the application. These will be governed by many considerations: the region, platform, and target demographic. Mobile finance is only going to continue growing, and as the number of people born into the digital age also continues to grow, smartphones — and thus, smart finance — will soon become our single point of interaction with the finance world.

Unless otherwise cited, all facts and figures were found in the Liftoff 2019 Mobile Finance Report. You can download the full report here.

Co-authored by Anmol Parande