FinTech Expands with a Mostly Mobile Approach
The last decade has seen some dramatic changes to the financial services industry, particularly with the addition of FinTech solutions to reduce friction. With mobile solutions rapidly outpacing traditional options, the path forward is clear. A flexible and consumer-driven approach to financial services is a must. Today, FinTech apps are the third fastest growing market segment in mobile. User time spent on business and financial apps has increased 33 percent, year-over-year, and falls just below shopping, communication and entertainment apps. As users spend more time on mobile banking, payments, wealth management, and other financial activities, the need for more FinTech becomes clear, and companies rush to fill market voids.
FinTech Apps and the Market
Banks have universally adopted mobile platforms to deliver basic services. Account access and management is easily available through traditional banking institutions. As more consumers move away from brick and mortar locations, digital-only banks spring up around the world. Mobile payments are taking a large chunk of the P2P market. Payment apps are one of the fastest growing segments in FinTech, with the number of payment app downloads nearly doubling between 2015 and 2016. By 2019, mobile transactions are expected to make up 30 percent of the P2P payment market. Even traditional industry leaders like MoneyGram are falling behind the agility and direct-to-digital approach of mobile startups in this space.
Broad Categories of FinTech
While there is some argument about what should fall under the heading of FinTech, most industry experts agree that consumer-facing processes are the foundation. For banking, that often means payment, investment, credit monitoring and budgeting apps. Insurance and lending support can also fall under this heading. Insurtech VC funding surged 225 percent in a single year, as this slow to move category has started to respond to customer demand. There is no one-stop-shop for all categories of FinTech, but the first to earn an install in any category is often the default app for those services.
Mobile Financial Tech Means Mobile Marketing
With consumers using mobile to handle daily financial tasks from sending out a bill payment to reconciling accounts, providers need to reach those customers. Traditional banks are often slow in adding new technology due to increasingly expensive legacy systems. Startups don’t have that baggage, and can often generate a user base due to a new service or streamlined interface. Digital wallets let you consolidate all of your payment methods into one place. With service like these, consumers select, download and stick with a single provider. The convenience of having everything in one place would be lost if they regularly switched providers. That means the app downloaded first has a major advantage.
Target Mobile FinTech Market
Millennials, the largest employed segment in America at 34 percent by 2020, are comfortable with mobile devices. Adults smartphone users spend approximately two and a half hours per day on their phones. Much of that usage is directly tied to apps, and the FinTech category owns a third of that time. The challenge lies in gaining a broad user base.
Since customers are already on mobile, and already used to using mobile apps to manage financial decisions, it can be a simple matter of adding the right advertising to the mix. Even capturing a small percentage of the market can pay big dividends. The best marketing finds the most comfortable avenue for potential users, offers a value-added service and makes installation seamless. All of this can be managed through mobile, and help the FinTech market continue to grow at its current rapid rate.