Historically, the banking industry is full of non-digital native companies and is undergoing a massive digital transformation.
Today, an organisation’s product is its ultimate revenue driver. But with new fintech applications and services hitting the market daily, competition is tighter than ever. And with ever-evolving privacy standards, organisations can no longer look to third-party sources to help personalise the customer experience.
Companies looking to attract, retain, and grow their customers must leverage first-party product insights to create better product experiences that lead to increased transactions and long-term loyalty.
The pandemic-fuelled fintech boom
By 2023, IDC predicts that companies will have spent a staggering $6.8tr USD on digital transformation efforts. The COVID-19 pandemic further fuelled the financial industry’s digital transformation, as businesses quickly needed to adopt fintech solutions and move financial services online.
The rapid growth of fintech products has permanently changed the implementation and design of financial solutions. Many companies already benefit from a data-driven, product-led approach to solving customer problems. And fintech products’ growth appears to be a lasting byproduct of the pandemic.
Our recent data report found that since January 2020, the industry has seen a 337% increase in daily active users. This rapid digital shift has forced every financial organisation to rethink how they bring value, win and retain customers, and increase customer lifetime value.
Improve retention rates with privacy-centric personalisation
Fintech has notably high acquisition costs and low loyalty rates. This reality can make it challenging for companies to accelerate growth strategies and improve retention. To solve this, companies must adapt and implement a personalised approach to meet the high expectations of today’s consumers and build relationships at scale. As increasing user engagement is critical to customer loyalty, real-time access to insights into how customers use fintech products is fundamental to success.
While customer expectations for personalisation grow, so do their expectations of privacy. With evolving privacy regulations across Europe, companies risk fines and loss of customer loyalty if they are not vigilant regarding compliance. Financial data, in particular, is rich with personally identifiable information (PII), and today, winning fintech companies are leveraging first-party behavioural data to improve their personalisation efforts while meeting privacy obligations.
Behavioural data grants product, marketing, and customer success teams a deeper understanding of the entire customer journey without requiring third-party sources. Customers are telling businesses a lot just by how they use digital products. Behavioural analytics allows teams to tap into this wealth of information to improve product experiences, increase the efficiency of marketing campaigns, and increase revenue and retention.
Increase transactions with product experimentation
When a user initially engages with a fintech product, the race is on to activate acquired users to make their first transaction. To better understand and activate these customers, the top companies in the world today are leveraging A/B testing and other experimentation processes. By leveraging experimentation and behavioural analysis, businesses can better understand which milestones drive users to their first—or fiftieth—transaction and ultimately leverage those insights to deliver the best experiences faster and at scale.
And this experimentation must take place across all channels. Our recent report finds that while users have been eagerly adopting personal finance tools across apps and websites, apps have grown more. Over our two-year data period, the number of monthly average users choosing apps to access their personal financial products grew 92% against January 2020, while the number on websites grew by 61%. While this is an impressive increase, the fact remains that fintech companies need to continue to invest in both product experiences to maintain growth.
While the pandemic clearly sped up the fintech industry’s growth, apps and websites in the space continue to grow at record rates. In a highly competitive market, fintech companies need actionable and quick insights to gain, retain, and grow their customers. By leveraging behavioural data to make smarter product decisions, fintech companies can increase transactions, drive customer loyalty, and optimise customer lifetime value, all while ensuring privacy needs are met.
About the Author:Daniel Bailey is the Vice President of EMEA at Amplitude