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Deep Dive: How top fintech and banking apps improve engagement with consumers

  • Financial apps are constantly looking for ways to deepen their engagement with their users.
  • On today's Deep Dive, Tearsheet's Sara Toth Stub discusses how financial apps are becoming stickier.
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Deep Dive: How top fintech and banking apps improve engagement with consumers

So much time and energy is spent acquiring new banking, payments, and investing customers. But while financial apps have industry-high usage numbers in terms of how much time users spend on them, user lifecycles are short. A recent study showed that less than 5 percent of people who download a financial app are still using it 90 days later.

Tearsheet's Sara Toth Stub wrote a story on what top fintech and banking firms are doing to increase engagement on their apps. From focusing on an apps feed, to increasing content production, to partnering with brands their customers love, firms are finding a way to keep their users around.

Sara Toth Stub is my guest today for a deep dive podcast to discuss how top fintech and banking apps are finding success in deepening their engagement and retention of their customers.

The need for increased engagement

Although various studies say that financial apps are very popular with users, competition has increased a lot. There are a lot of apps out there. And user attention drops off. Of people who download financial apps, only 3.4 percent are still using them on a regular basis after three months. Firms are struggling acquiring and maintaining their users. Costs to acquire and keep customers have also increased. They're spending more money.

It starts with personalization

I spoke with a variety of firms and analysts for this piece and one way banks and fintechs keep relevant for their users is to personalize them in terms of what type of information, updates and advice they're giving. They want users to feel their financial apps are relevant to their lives and don't want to miss out on them.

These apps know certain things about you -- your bank account, transactions, and where you're spending and investing your money. These apps also want to know about hidden debt -- they need users to feed them information, too.

The bi-directional newsfeed is sticky

FIs and fintechs use the newsfeed or activity feed to give and take information. Venmo's launch of a public feed made this notable a few years ago. You could see where your friends were spending their money. Most financial apps today have private feeds but the firms use these feeds as a way to capture more information about their users.

For example, Credit Karma recently launched a function called "Stories", which is like a newsfeed. Users receive little pieces of advice like 'now would be a good time to shop for car insurance." Why is that specific user given that advice now? Well, it's because Credit Karma determined that the user's credit score had improved, which is taken into account when you apply for certain types of insurance. At the same time, Credit Karma needs to gather more information about its users and will query if a user had paid off her credit balance this month or whether there are big expenses coming up. So, instead of sending an email or asking users to fill out forms, these bite-sized interactions help gather information and provide advice.

Status Money is an app that allows users to compare their spending to people with similar backgrounds and incomes. People divulge information about their spending habits and financial lives, and using the app, it's like a contest. The firm's CEO said that money is inherently competitive. So, when a user sees a similar person in a different situation financially, it may motivate them to improve their habits. The app also distributes virtual badges users can exchange for money, too.

Content's role in engagement

I think we've seen a real convergence. Obviously, there's a lot of financial news and content online. And for years, you could use something like a Yahoo Finance to personalize alerts and information. But, we've seen the investment platform Robinhood launch a service to provide this information within its own app. Robinhood knows what you're looking at and it's a way to get users to spend more time in the app.

Partnering to provide value

Venmo recently announced a program with Pepsico and Chipotle. The financial app allows brands to give loyalty rewards -- like discounts and cashback -- through the Venmo app to end users. Again, this is a way where Venmo expands the circumstances where people can use its app.

Financial apps move to lifestyle

Financial apps aren't just places where you go to transact. People use them to get advice or to find a bargain or deals at their favorite retailers. They've become much more than just transactional. Stash is a good example of this. It started out as a mico-investing tool and now, it offers a debit card and has become a place to save, spend, and transfer money. This has become core to its platform, as the Stash CMO told me. It didn't start out that way. We're seeing apps get into various areas of your financial life, bringing in lifestyle and consumer functionality.

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