Follow the Money: Why Fintech Needs to Double Down on Mobile Spending

Discover the most effective techniques to develop fintech apps that are more effective and efficient while also improving revenue and cost management

Photo of a woman using a mobile application
Listen to Article

When our team recently set out to uncover how much of finance and banking companies’ engineering budgets were being invested in mobile compared to the amount of revenue mobile generates for these companies, we expected to see a healthy ROI. 

Our theory was that the more money companies spend on mobile–especially in terms of automating complex processes that used to be handled manually and introducing more innovation–the more lucrative mobile would become for the company. 

Revenue generation stats

While we weren’t wrong, we also discovered something we didn’t expect. According to the 2022 Mobile Product Success in Finance & Banking Report, nearly half (49%) of the senior mobile leaders we spoke to at finance and banking organisations say that mobile is responsible for approximately 75% of their overall business revenue. Yet, 46% of them reported that their companies invest less than 10% of their total engineering spend on mobile app development.

How much expenses go towards mobile app development

This finding shines a light on the fact that revenue generated by mobile–and mobile’s impact on businesses as a whole–is potentially carrying the weight for other areas of the business that are less profitable, yet demand more engineering budget than mobile. This begs the questions…

1. Where is the rest of the engineering budget going–and should some of that money be reallocated to mobile?

To answer this, companies will need to take a look inward following the whirlwind couple of years mobile recently experienced. Finance and banking companies have been particularly affected by consumers’ adoption of mobile apps, for everything from payments and banking to investing and planning. Between January 2020 and October 2021 alone the number of daily active fintech app users increased by 337%. Despite this surge, many companies have still not made the connection between the success of their mobile initiatives and the success of their overall businesses.

One thing companies will want to look for when conducting these critical self-audits are areas where they’re making big investments in things that drive only small returns. This can be outside of mobile engineering or within it.

We often see, for example, that emerging mobile visionaries–who tend to have an artist-like focus on technological excellence and perfection–prioritise their technology investments above things like the impact their apps should have on their business or bottom line. But these investments often only result in small incremental changes to their product and put them at risk of being out-developed by challengers that know how to capitalise on their target market.

2. If companies invest more in mobile engineering than they are now, will revenue increase proportionately to their investments? Or is there a ceiling?

There might be a mobile ceiling, but chances are slim-to-none that any company out there has come anywhere close to hitting it. Mobile is changing too fast and the goal posts to success are constantly shifting, which keeps companies across the board on their toes. 

According to Lina Walton, Digital Bank Technologies Vice President, Engineering at Synchrony Financial, “We’ve just scratched the surface on capabilities of mobile finance. Open banking has a long way to go in the US, and as we expand our digital footprint across iOT, seamless integration across channels will be pivotal.”

What we do know is that the companies whose mobile initiatives are currently performing best–in terms of mobile app users, marketshare, growth and revenue–are those that are able to out-invest their competition on mobile talent and automation. While these “ingredients” likely won’t change any time soon, their relative importance is quickly changing. 

As automation quickly becomes just as–or even more–important than being able to hire the most expensive engineers, we’ll begin to see emerging fintech companies competing with larger, more established financial institutions on a more level playing field. Engineering talent will be used almost exclusively for innovation, rather than on babysitting manual technologies, troubleshooting or waiting around for unnecessarily long processes to unfold.

3. How can fintech companies optimise their mobile apps to drive even more revenue?

For companies that are willing to take a closer look within and assess their overall engineering budgets, here are a few areas of mobile they can safely invest more in to directly impact business revenue.

Focus on speed–especially when it comes to payments

While achieving speed across both internal processes and the user-facing experience will play a huge role in an app’s success, one area that’s particularly vulnerable to a lack of speed is payments. 

According to Sujit Unni, CTO of Paysafe, “The payments part of the mobile process is a particularly expensive place to be slow. Outpacing competitors in that process is what’s creating the winners in this space.”

Prioritise the user experience

One of the main ways fintech app companies have revolutionised the financial services sector is through their strong customer-first approach to user experience. This spans everything from innovative and accessible features to simply ensuring that apps are free of crashes, outdated features, and slow load times. 

Automate core mobile engineering processes and reallocate engineers’ time to innovation

As companies are able to automate more, they will be able to free up mobile engineers to dream up new features and experiences that will keep fintech companies ahead of competitors and interesting to users. 

Automating processes like compliance and security checks around releases enables companies to release to the app stores more frequently, innovate faster, and outmaneuver their competition.

Don’t fall into the trap of slowing down rapid iteration

One mistake that market leaders often make after surpassing their competitors’ market share is deprioritising the rapid iteration responsible for their original success. 

Ironically, the main difference between now and in the beginning is that they’ve now got large mobile organisations and the security and infrastructure they need to launch big ideas with very little negative impact on users. In other words, now is the time to iterate even more, not less.

Prioritise major feature releases over minor improvements

Avoid falling into the trap of spending too much time making small iterative improvements. While the devil is in the details, poring over minor fixes shouldn’t take the place of dreaming up compelling new features. Without these, fintechs are particularly vulnerable to competitors that are willing to make bigger bets. 

Manage regulatory and compliance-related bottlenecks

For fintech companies, keeping up with regulations becomes a larger job as mobile’s importance increases. When we asked mobile leaders at financial and banking organisations if they were experiencing any downsides or challenges due to the regulatory and compliance requirements in the industry, 51% of respondents said that the regulations and red tape around mobile releases pose the most significant challenges. Eleven percent (11%) said they can’t use the SDKs they want and 8% have limited access to cloud tooling. 

Interestingly, the more a company’s revenue is impacted by mobile, the more regulations-related issues they have. Among the companies that reported 75% or more of their revenue is generated by mobile,  94% said they face red tape-related challenges.

One way to manage these bottlenecks is to involve security, legal, and compliance teams earlier in the development process. This approach, however, should be part of a larger process that combines automation and communication throughout to keep last-minute hurdles to a minimum.

Achieve a high level of security without sacrificing experience and simplicity

Innovative, digital-first finance apps aim to simplify the end-user experience, but they raise unique security concerns. The extra security steps needed to assuage these concerns often result in a longer, more complicated user experience — but sophisticated biometric tech may hold some of the answers.

According to Dama Damjanovic, Principal Engineer at N26, “With the increase of fintech products and trust on the market, the amount of money and assets people hold in digital-first companies has increased, and with it, digital financial crime. More often than not, the increase in security comes at an expense of user experience and simplicity. I believe biometric technologies have the chance to bring the best of both worlds.”

Mobile experiences are now fueling anywhere from a majority to all of some fintech companies’ revenue. The more these companies invest in achieving mobile excellence–beginning with their internal processes and ending at the user experience–the more revenue potential they’ll inevitably see.

***

About the Author: Barnabas Birmacher is the CEO of Bitrise.