Covid Triggers a Boom in Personal Finance App Market

With close to 1.3 billion downloads in the second quarter of 2020 and finance apps being used over 1 trillion times on Android devices throughout 2019, it paints a decent picture in terms of growth of adoption of personal finance apps.

In fact, according to research conducted by Google, a smartphone user on average has close to 3 personal finance apps installed on their mobile devices with 4 in 10 using their devices for managing finance, checking account history, tracking investments, paying bills among other financial activities.    

As we observed in our State of Mobile Finance Report 2021, the personal finance industry is currently going through an upward growth trajectory, spurred on by the pandemic. With an increase in adoption observed across the board, sub-segments like payment, banking, lending, investment, and wealth management are further driving growth across the larger personal finance space.

Pandemic-induced economic uncertainty is one of the contributing factors behind this fascinating growth observed by the personal finance vertical. As more and more users hunker down on their personal finance, prioritising wealth generation and management, there is a conscientious effort to improve financial outcomes during an economically turbulent time. 

Up to 150% increase in daily active users for personal finance apps 

With lockdowns and state mandated curfews (to curb the pandemic) keeping consumers at home, the captive audience had enough time on their hands to browse through offerings from several personal finance management apps. Unsurprisingly, the number of downloads, as well as daily and monthly usage for the said apps have skyrocketed through most of 2020 and continue to grow well into 2021. 

Just to set the context, the personal finance management arm of Moneycontrol has observed a *10 per cent increase in monthly active users during the period of July 2020 to January 2021. During the same time, the popular expense splitting app, Splitwise noticed a 14 per cent increase in daily usage, 6 per cent growth in monthly usage with 41 per cent increase in downloads. Meanwhile, Moneyfy from Tata Capital, the platform providing mutual funds, insurances and loans, among other portfolio offerings saw a 150 per cent increase in daily active users, 290 per cent increase in monthly active users and a whopping 220 per cent increase in downloads.

*all data extracted by MoEngage 

102% increase in personal finance app usage, spearheaded by millennials and Gen Z

Apart from downloads and usage data, another trend emerging across the personal finance ecosystem is time spent in-app. The increase in time spent in-app, further solidifies the growing interest among users to keep tabs on their wealth growth and investments while exploring other financial offerings that can help with long term capital gain. 

The average weekly time spent in-app for personal finance apps has increased to 57 minutes, growing by 63 per cent, the highest growth observed during the pandemic. These numbers hold their own even when compared to verticals generally associated with higher time spent in-app viz. retail and ecommerce apps (65 minutes), entertainment apps (67 minutes), and music apps (80 minutes). 

In addition to the renewed interest in improving financial outcomes, the increase in time spent in-app can be attributed to the overall increase in smartphone usage among captive audiences during the pandemic, i.e., increase in smartphone usage went up by 10 minutes per day. Millennials and Gen Z are the key contributors to the increase in time spent in-app, with a 102 per cent increase in their usual usage duration.    

While millennials and Gen Z are leading the charge, it would be false to assume the rest of the demographics aren’t contributing enough. There’s an increase in time spent in-app for the personal finance category even among baby boomers and Gen X cohorts, clearly establishing a demand for personal finance management across generations and age groups. 

While it is clear as day that the pandemic acted as a catalyst to drive adoption for personal finance apps, it is worth noting that this shift in behaviour and mindset were already in the making for the last few years. As more and more users are choosing digital means to keep track of expenses, manage, and grow wealth, the scaling opportunity for the personal finance category seems boundless. 

How can brands in the personal finance ecosystem cater to this increased demand?

• Building trust among potential customers: The first and most important factor in the growth journey of a personal finance app is building trust among the customers. With a plethora of personal finance offerings available in the market, why should a user choose your offerings? In addition to ease of use and overall seamless experience offered by your product, it has to do with how much a customer can trust your brand. 

Now, there are various ways a brand in the personal finance space can establish trust; you can run brand perception campaigns and generate social proof, whether it is through customer testimonials, referral programs or word of mouth from key opinion leaders. Whatever you do, always remember it isn’t enough to run campaigns which establish your brand as trustworthy, you need to engage and interact with users and solve their problems, on whatever channel they’re mostly active on. 

• Frame an incentives program with seamless referral options: Incentives and loyalty programs are all the rage right now and why should they? They allow a brand to directly engage with users and add real value for all to see. This is the need of the hour if you’re in the personal finance category. Having a well-planned incentive program isn’t enough, you need to ensure referrals are easy and fast, without too many steps and page loads in between. In fact, studies show that reducing new page loads for referrals increased the chances to refer by 4 times.

• Engage users better by segmenting them and personalising their experience: Personalisation is no longer a ‘good to have’ add-on. Rather it is an essential part of your customer engagement strategy, more so for a personal finance brand. You need users to explore your offerings and invest in the right one based on their needs.
  
  Leveraging data and customer attributes, an Insights-Led Engagement approach will help you analyse your customers, predict their behaviour, create segments based on behavioural attributes, personalize their experience accordingly, engage them better and run high-performance campaign to boost retention.     
  
  
• Ensure inclusive communication by focusing on vernacular languages: Owing to internet proliferation across the country, some of the biggest contributing demographic comes from the tier-II and tier-III cities. As a personal finance brand, this is one demographic that’ll be crucial to your growth. Ensure that your marketing communication stresses on including vernacular languages apart from English.

• Provide users with a secure and consolidated view of their financial holdings: It goes without saying that personal finance brands should provide users with a consolidated and secure platform where they can check on their savings and expenditure, observe the health of investments, and explore newer offerings which will help in increased wealth generation. This is where technology like Blockchain hyperledger, robotic process automation, AI and machine language optimisation will play a big role.    

The increased demand for personal finance management is driven by the need for efficient and transparent access to financial information, smart investment and transaction opportunities, and above all secure and protected systems. If the download, usage, and time spent in-app trends are any indication, the personal finance category will continue picking momentum steadily and continue on the growth trajectory. What other interesting trends have you seen emerge from the personal finance vertical?

The author is CEO and Co-founder, MoEngage

DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.