There has been a great inclination towards mobile in the financial sector. The advent of Mobile has created a radical shift in the financial industry. Standing out in the Fintech marketplace is becoming increasingly difficult as a growing number of sophisticated and technologically advanced firms saturate the industry. Meanwhile, traditional institutions are only now starting to catch up.
This article enables marketers to understand the changing financial
ecosystem in order to plan and adapt for the future.
In the recent years some key trends have been observed in this sector:
- Customer expectations are changing - as consumers become accustomed to instantaneously accessing multiple services from their mobile devices, there is an expectation for businesses to provide users with efficient and specifically tailored products and services.
- Platform transformation into multi-service ecosystems is accelerating - digital advancements have normalised the ability for users to access an interconnected set of experiences within a single app.
- The adoption of advanced technology is becoming increasingly common - disruptive technologies are evolving that are altering the industry at a rapid pace, alongside an increase in cyber security threats. In addition, new commercial and regulatory pressures are radically changing sector priorities and the Fintech marketplace.
If financial institutions spent the last decade trying to figure out millennials, 2020 has brought with it a new demographic priority: Generation Z.
Gen Z is now the largest generational cohort in the world, accounting for 40% of all consumers and over £35 billion in annual spending. Smartphone use also constitutes 52% of their screen time (greater than any other cohort), highlighting a paradigm shift towards mobile app usage.
With this in mind, financial institutions have to cater to changing consumer behaviours. Customers now expect financial institutions to expand into holistic and customer-centric service providers.
The most advanced cross-vertical services can be found in China, in particular Alipay and Tencent (WeChat), and are expanding worldwide.
It is essential that financial institutions not only remain digitally savvy, but also that they rethink their mobile channel in order to remain competitive and gain market share.
At the intersection of finance and technology lies a new phenomenon which is reshaping both the industry and consumer behaviour: Fintech.
A rapid growth and adoption of Fintech
79% of smartphone owners have used their device for an online purchase in the past six months. It’s projected that the total value of payments made using mobile devices will have reached £500 billion by the end of 2020.
The current scenario
66% of Fintech companies are currently at low risk of being negatively impacted by the pandemic, more than double the wider ecosystem average of 32% , whilst 20% are potentially positively affected. In fact, only 1% of Fintech companies were predicted to be critically impacted by the pandemic.
This resilience is especially important considering that mobile payments have increased by over 50% during the COVID-19 pandemic; 1 in 7 people will likely use a mobile payment app in 2020.
In contrast, traditional banks already struggling to keep local branches open have been forced to limit their in-person services even more by the pandemic, closing over 25% of local branches. These trends are putting pressure on firms to replace legacy infrastructure to deliver a competitive personalised digital payments experience.
The Global Mobile Payment Market
In the context of rapidly evolving consumer and industry expectations, it is imperative that well-established institutions adapt ahead of the digital transformation that is reshaping the financial market in order to remain concurrent with technological shifts as the market becomes increasingly saturated with mobile-centric businesses.
Conversely, emerging startups in the field need to ensure they are able to compete with the size and existing user base of large corporations. As a growing number of start-ups look to disrupt the industry, only those with an innovative and distinctive app marketing strategy will make a significant impact.
Coupling comprehensive preparation for the future with a flexible and holistic approach is integral to success in such a dynamic and competitive environment.
Now that we have analysed the growth of fintech apps, let us also analyse the current scenario of Traditional Financial Institutes. Fintechs have disrupted the banking industry by creating seamless, customer-centric payments solutions and have managed to gain a significant market share as a consequence (1 in 4 under 37s and 14% of UK banking customers use challenger bank Fintech).
However, banks can also capitalize on this opportunity through digitalisation and prioritising a mobile-first business model. If banks transform in this way, it is estimated that they can grow revenue by 30 percent before 2022. The banking industry will undergo a major transition across the next decade. Many traditional institutions now face the challenge of having to disrupt their own business models in order to sustain growth. Otherwise, mobile-based services threaten to disintermediate traditional banks and win over their consumer base.
It is evident that competitors are using technology in tandem with a customer-centric ethos to attack many aspects of traditional banking and capital management. The majority of financial sector executives (73 percent) perceive consumer banking as the one most likely to be disrupted by Fintech.
Traditional players are still in the early stages of customer-oriented solutions, at least when compared to the propositions put forward by Fintechs. Only half of the respondents from the banking sector (53 percent) believe they are consumer-centric, compared with over 80 percent for Fintech survey participants.
What is the right strategy to grow your fintech app in this mobile first era?
No doubt the fintech sector is growing massively and it is definitely inclining towards the mobile first trend. But this doesn’t mean that it is very easy to grow your user base if you have a fintech app, and the key reason is the growing number of competition in this sector. So it is very crucial that you follow the right advertising practices in order to stay ahead in the competition. We will discuss some of the marketing strategies that have proved to be beneficial for fintech apps.
Building a trustworthy brand name among your users
Since this industry is associated with financial transactions and usually users are very skeptical when it comes to such apps, it is very important that there is a foundation of trust between the consumers and the financial institution. As a new player, fintech apps have the daunting task of persuading consumers to leave providers they’ve worked with for years for something new and potentially risky. There are always some consumers excited to try out an innovative offering, they represent a fraction of the total available market. And the solution to this is right branding. The branding strategy must be focussed on lowering the level of hesitance among consumers to try out something different from the status quo.
Targeted user acquisition through mobile marketing
When you spend budget on mobile marketing for user acquisition, it is essential that the right methodology is followed. Reaching out to the target users who are more inclined to trying out new fintech platforms can massively drive up your return on advertising spends. For an industry like fintech, we must ensure that maximum of the advertising budget is spent on targeted user acquisition and retargeting active users, as these strategies will lead to users using the apps frequently and getting habituated to them, which will ultimately lead to higher revenue.
Diversification of paid media channels
The pandemic significantly accelerated the global rate of mobile adoption. Almost one-third of mobile devices have a fintech app installed. Consumers are more comfortable than ever living their professional, personal, and financial lives out of their smartphones, and fintech firms can take advantage of changing consumer preferences by using in-app ad advertising to connect. Apps that combine careful paid media usage with a compelling message position themselves to succeed in the coming years.
While a complete fintech marketing strategy will always be a mix of channels, many firms overlook newer methods in favor of the tried and true. While the right combination of promotional media will always be unique to every company, it’s also a good idea to actively invest in innovative engagement opportunities. In any case, keeping the customer at the forefront of your mind as you build your strategy is key to success.
In the end we can conclude that the fintech industry is growing rapidly with a growing trend of consumers switching to fintech apps from traditional financial institutions and services. And mobile advertising has proved to be a faithful companion in this journey. With advances in mobile advertising, fintech apps can make use of this for further accelerating their growth and identifying their ideal users.