4 Ways to Differentiate Your Banking App and Drive Acquisitions

Financial institutions have no choice but to prioritize the mobile channel. With COVID advancing nearly everyone's digital offerings, however, it's hard for any one institution to stand out. Marketers can overcome that with the right mix of organic and performance marketing, a low-friction user experience, a tight focus on security and creative use of customer feedback.

Like so many other industries, banking has been transformed by mobile technology. Internet users’ adoption of digital financial services almost doubled over the past two years, and 64% of digitally active users engage with fintech products like online banking and trading apps, according to EY’s Global FinTech Adoption Index 2019. This trend has only been accelerated by the global coronavirus pandemic.

Not only have sessions and app installs increased significantly in the finance vertical, but the amount of time that users are spending in those apps is also on the rise, according to Mobile Finance Report 2020. In the first half of 2019, users were spending an average of 7.7 minutes per session in banking and payment apps, but by 2020 that rose to 8.35 minutes — an increase of almost 9%.

Additionally, the report found the number of sessions in payment apps increased by almost half (49%) on average across the countries in the survey. The most impressive growth rates were seen in Japan (75%), Germany (45%), Turkey (39%), the U.S. (33%), and the U.K. (29%). Consumers are increasingly using mobile to carry out transactions while complying with social distancing.

So how do banks and credit unions take advantage of the growing popularity of banking apps and stand out from the competition? Four steps point the way.

1. Invest in User Acquisition Marketing

Among many other changes brought about by COVID-19, banking and payment apps saw a precipitous drop in user acquisition (UA) costs. Starting in February, Effective Cost Per Installs (eCPIs) — or how much it costs to get a new customer to install your app, calculated by dividing total ad spend by total number of installs — dropped 77% before bottoming in May. Costs have started coming back up since, but even so, financial marketers are still able to acquire mobile app users at a fraction of the price they were at the start of the year.

With eCPI levels low, now is a great time to ensure you’ve got a good marketing mix and a user acquisition strategy in place. While organic performs extremely well in the mobile finance vertical, performance marketing should be an important part of a winning UA strategy — especially for iPhone and iPad users, who are more loyal than average in both payment and investment apps.

By keeping your budget steady, you can acquire more users for the same outlay at lower eCPIs. Data suggests that there is plenty of growth potential in the banking industry, and paid acquisition is an essential part of getting those users into your app.

2. Less UX Friction Means Less Churn

While many app marketers are focused on user acquisition, it’s becoming increasingly clear that to make the most of your marketing budget, apps need to focus on user retention. The Mobile Finance Report 2020’s data suggests that finance app users are a fickle bunch.

In fact, mobile banking app users are slightly more likely than users of other apps (e.g. news, music or shopping) to churn in the first few days. However, this difference is short-lived, and by day ten users of banking apps turn over about as regularly as users in other verticals.

On the other hand, payment app users churn quickly and remain below the average in terms of retention for the first 30 days.

Spending money to acquire users who leave almost as soon as they download your app clearly is not money well spent. The first step to retaining users is providing an exceptional user experience — making users’ journeys as simple and easy as possible.

Friction has too often just been accepted as part of the banking experience. But where challenger banks like N26, Chime and others have really disrupted the market is by making their offering as seamless as possible — something all banking and payment apps can learn from. One key lesson is that it’s important to start from scratch when designing a digital application, not just digitize a clunky legacy process.

Users will often abandon an app when presented with sign-up forms or asked to disclose too much unnecessary personal information. When asking for these details, always explain in the app why it is necessary and how it will be used. This is a smart way to ensure users are comfortable with the information they are submitting to you and shows your brand’s transparent — and trustworthy — approach.

3. Prioritize Mobile Security

Security — always important in banking — has become even more so during COVID-19 when nearly everything we do has moved online. That’s doubly true for mobile banking apps. In the digital underworld, fraudsters follow the money. It should be no surprise then, that as usage rates grow, so too do the risks for the banking sector.

Financial apps are coming under increasing threat from automated fraud bots. These bots can hack into users’ accounts, make purchases and drain funds into other accounts. They can also uncover user credentials to be sold to cybercriminals. Automated attacks leave customers’ most private financial information at risk, which can be devastating for the financial institution, the user and the economy.

Bots are tough, but not impossible, to catch. Financial institution app designers should incorporate data and behaviors that bots cannot mimic — like scrolling and tapping in irregular, unpredictable patterns.

4. Use Customer Feedback to Stay Ahead

A key differentiator for financial apps is customer feedback. With many large traditional banks shrinking their branch networks, and with call centers often overwhelmed since the start of the pandemic, advanced mobile banking apps have found success by paying attention to what their customers are saying. In fact, poor customer service is cited by consumers as a top reason they change banks. Challenger banks like Monzo have pioneered different approaches to ensure customer satisfaction, including community forums where users can submit suggestions.

This approach led Standard Chartered to launch a standalone virtual bank called Mox early in 2020. Mox is designed to attract users from among the 1.7 billion adults worldwide who remain unbanked, two-thirds of whom own a mobile phone that could help them access financial services.

When starting out, it was crucial for Mox Bank CEO Deniz Güven and his team to identify the different pain points with the current offerings on the market. From there, they decided to build the services missing and include them in their app. As Güven pointed out: “You cannot differentiate in this kind of market with just a new mobile banking app. You have to give a reason for customers to change their banks, which isn’t easy.” This meant coming up with new ways of onboarding clients, a new risk framework and a new cloud-based operating model.

Going forward, financial institutions will have no choice but to prioritize the mobile channel. Whether it’s to reach customers who want to avoid in-person transactions in the age of COVID-19 or simply to please younger mobile-savvy consumers, apps are a must-have. Get them right and consumers will sign up and stay with you.

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