COVID-19 drives rocketing app use in 2020 – but banks must beware…

Data from mobile analytics firm App Annie’s State of Mobile 2021 survey shows that financial app use surged through 2020, driven by COVID-19 and the longer-term trend towards mobile as the main customer channel for all banking services, including payments – and increasingly mortgages, investing and insurance.

Time spent on financial apps throughout COVID-19 rose by 45 percent through 2020, with users in Argentina, the US, Russia, India and Turkey showing the biggest increase in time spent on mobile apps. App downloads – and thus new users of financial apps – were greatest in Argentina, Brazil, Mexico, Turkey and India. For the first time, new legislation limiting peer-to-peer lending led to a 40 percent decrease in app downloads in China.

“China showed the first recorded decrease in financial app downloads in 2020 owing to new peer-to-peer lending legislation.”

The majority of app use came from users downloading digital banking portal apps and mobile wallets – though in an exclusive interview for PCM, Amir Ghodrati, Director of Market Insight at App Annie, said that consumers were beginning to shift from simply using an app, to selecting apps focused on the delivery of digital-first services – in other words, not just a vanilla copy of PC and laptop-based services.

“The key question for financial firms is user comfort with their apps. That means making functionality good enough for people to want to use the app – and thinking about value-adds like easy access to chatbots, online tutorials and a good overall user experience.”

Investing up during COVID-19

In what may be seen a warning sign to bank services outside payments, the download and use of investing and wealth management apps grew faster than general financial services at 55 percent last year. Growth in usage of investing apps more than doubled in the US, South Korea, Canada and Mexico, while rates of more than 50 percent were also recorded in countries like the UK and Germany.

In both Canada and the US, investing apps were the second most-popular download (Wealthsimple and Robin Hood, respectively).

While Amir Ghodrati apportions this success to wealth management apps adding great features – such as Robin Hood offering users free shares – and a mobile-first approach, it’s likely that consumers are equally as attracted by the management fees on offer, which are around 25 percent of those offered by banks – especially to consumers with smaller portfolios.

PCM SAYS:

Banks and payments players should sit up and take notice of the stratospheric growth in investing apps. This is an early warning sign that fees are going to be a major future battleground – alongside the quality of customer service.

We’ve seen the same thing happen in international money transfers, where consumers want their money delivered faster and at lower cost. With mortgages and insurance now being offered by app in some markets, expect the downward pressure on fee structures to be replicated across the service portfolio as the digital revolution continues.

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