How To Reduce Abandonment Rates For Fintech Apps

In the wake of the Covid pandemic, fintech transactions rose by 13% and their volume by 11%, indicating significant industry growth. However, two years in, we are facing another new reality as the fintech market starts to mature and consumer expectations evolve alongside it. Abandonment rates of fintech applications are rising with customers becoming dissatisfied with digital financial products, especially during onboarding. But why is this happening, why now and what can you do to prevent it?

A Fintech Paradox

An uptick in users is met with high abandonment rates—this is the fintech paradox.

Despite this paradox, the market continues to mature, and, in general, more users are trusting fintech products with 37% citing a fintech firm as their go-to firm. With that being said, over 68% of consumers are abandoning fintech applications during the onboarding process.

This is the fintech paradox. Although consumer trust in fintech providers grew during the pandemic, many of the processes they use to onboard users came straight from the brick-and-mortar playbook—long forms, lots of questions and a lengthy process to open an account—a world away from the easy-to-use digital procedure customers came to expect in other spheres.

Since the onset of the pandemic, the time that users are willing to spend on these applications has decreased. For example, in 2020, users were willing to spend 26 minutes onboarding to a fintech app. Now, in 2022, that number has been cut by eight minutes to 18 minutes 53 seconds total before a client drops out of the process for good.

However, it’s not the application alone that’s driving away users. Other reasons given in our experience include:

• Data protection and the amount of information requested indicate consumers remain hyper-vigilant about their security and correctly so. The banking industry experienced a 1,318% year-on-year surge in cybersecurity attacks in the first half of 2021 alone

• The lack of information is a factor. For example, the unbanked crisis affects over 1.7 billion adults worldwide. Although this is not all down to fintech providers, overtly strict processes contribute to keeping more and more people out of the financial system.

• Complicated and complex applications can affect the likelihood of completing applications too. Whether stemming from poor UX (user experience) design or overly strict AML/KYC procedures, many clients stated this as one of the reasons for leaving the onboarding process.

• Some simply change their minds during the process. Unclear, misleading or extensive onboarding processes can leave new clients fearful of the product or distrusting of how it works, leading to an increased drop-off rate.

How Fintech Providers Can Keep Their Customers

While financial providers, including fintech companies, are required to complete the necessary AML (anti-money laundering) and KYC (know your customer procedures), many wonder if it’s possible to simplify the processes for clients while remaining compliant. The answer is yes. Here’s how:

• Know Your Target Audience

Knowing your client base inside and out is a must. Gone are the days of the local bank where everybody knows everybody. Instead, consumers are demanding more personalized services that meet their needs on their smartphones. Utilizing user personas, research data, client interviews and more, you can better get to know your client and their needs.

This gives you the unique opportunity to personalize your product to your audience. As consumer needs continue to evolve and mature, it’s expected that consumers will demand more polished products and become less tolerant of unpolished ones.

• Make AML And KYC User-Friendly

Although AML and KYC are essential to any financial product, technology has advanced to ensure that these can be carried out with minimal hassle to users. However, many fintech and traditional finance brands continue to use outdated means to verify the information. Aside from getting the right technology to do this and ensuring the minimum documents required are present, brands should be aware of how this process is presented to the client to make it as user-friendly as possible.

• Address Privacy Concerns At The Outset

Data protection is a growing concern across many industries, and fintech is no exception. In fact, it should set the standards. Consumers want to know how their personal data is being stored, used and how it’s done. Being as upfront and transparent as possible in this respect helps deliver trust among consumers, making them more likely to use your company instead of a competitor. An excellent place to start is following all industry best practices, such as GDPR, etc.

• Think Global, Know Local

Unlike the localized banks of the past, fintechs are going global and their rapid takeoff is no surprise in the increasingly globalized world. With more people traveling (as pandemic restrictions are lifted), and the rise in digital nomads who travel and work, more and more people are interested in fintech firms that offer banking across borders. That said, local laws can cause nuances in services and financial procedures, so while a global strategy is great, it’s essential to look to local knowledge too to tailor your services to the market.

• Get The Right Technology At The Beginning

Although digital transformation can be costly, failure to evolve could prove fatal. Today’s consumers expect a seamless service that works to meet their needs no matter where they are. By strategically upgrading your service, you stand the best chance of meeting the consumer’s need for a smooth, fast financial service that’s delivered in your regional market.

Fintech And The Future: What’s Next?

As fintech continues to evolve and its customer expectations grow, providers will be faced with the dilemma to evolve and meet consumer needs or fade into the financial past. Although the pandemic proved that digital is the future, a simple digital version of a brick-and-mortar facility will no longer suffice, and it’s up to brands to adapt to new market realities.