Presently, there are over 20 Fintech unicorns in India. The Fintech sector in India is expected to reach $200 billion in revenue and $1 trillion in throughput by 2030. Funding of Fintech startups tripled in 2021. According to Amitabh Kant of NITI Aayog, the Indian fintech industry has attracted funding of over $27.6 billion so far. This is expected to increase to $150 billion by 2025.
All these statistics look promising for Indian Fintech startups in India. What is driving the explosion of the Fintech sector in India? Apart from increased funding, the near-universal acceptance of open platforms like UPI are playing a crucial role. India also has the 2nd largest number of smartphone users, most of whom fall in the age bracket of 20 to 59 years. These users are enthusiastically embracing digital options to present a world of opportunities for smart startups.
But customer acquisition and retention remains one of the bigger challenges for Fintech startups in India in a highly competitive environment.
The Challenge of Customer Acquisition in the Indian Fintech Sector
Despite the increased funding, the Fintech user base in India today is just around 10 to 15 crores. Nithin Kamath of Zerodha believes that the Indian market is still tough for Fintech companies looking to acquire more customers and drive up usage. Only 23 of the approximately 100 Fintech companies in India have achieved profitability.
Lending companies in the Fintech space have seen a 20-30% increase in their customer acquisition costs. Many of the Fintech startups target consumers using SEO keywords on online search engines. This means profiling users based on the similar search words that they type when looking for the cheapest loan or tenure. Fintech experts believe that when too many Fintech platforms are betting on similar ad words, it becomes expensive to attract the right set of borrowers as everyone has to fight for a share of the same pie. With the increase in defaulting customers, Fintech companies are focusing on high-quality customers (with a proven track record). To stay competitive, they are now betting more on digital technologies to increase their customer base and retain the “good” customers.
Getting the new customers who join a platform to start using the app-driven services to transact more and push up usage is also a challenge. Accounts abound of apps that new users use only once, usually to avail of a specific promotion, and then never again. Often this is because the app is hard to use, performs poorly, or delivers a sub-optimal experience when measured against the expectations of the user.
So, let’s discuss why the Fintech industry must focus on delivering an exceptional user experience to attract new users, increase usage, and deliver great outcomes all around.
Why Fintech Companies Need to Focus on User Experience
Be it a Fintech website or mobile app, user experience (or UX) is key to customer satisfaction. User experience needs to revolve around the customer’s need and facilitate the online journey they are likely to take. Additionally, UX must evolve according to changing customer needs.
Be it a Fintech website or mobile app, user experience (or UX) is key to customer satisfaction. User experience needs to revolve around the customer’s need and facilitate the online journey they are likely to take. Additionally, UX must evolve according to changing customer needs.
Users adopt a Fintech app based on how effectively it can address their requirements. Additionally, Fintech companies must focus on delivering customer experience more than marketing to acquire new customers. Despite all the effective marketing, poor UX in Fintech apps can drive away most users. On the other hand, a well-designed UX can make users “fall in love” with the product.
How Fintech Apps Can Transform the User Experience
The worldwide web has shown us over the years that user experience is not just restricted to a user-friendly app. It is also about app performance. For instance, BBC reports that they lose 10% of their users for every second delay in their website loading.
Fintech applications need to be ever more effective at keeping their users engaged. Recent research found that consumers spend 10.8 times more time on Fintech apps than traditional banking apps.
With effective UX research, Fintech companies can understand the users. Additionally, they can learn the user’s problem that the app can resolve and how users interact with the app.
For example, Fisdom, a leading fintech company in India, conducted UX research to improve their user’s signup process. They saw a significant reduction in new user drop-offs by moving their KYC process to the end of the signup process.
Here are some ways in which a good UI/UX design and app performance can help customers: User experience can set the tone during the signup and onboarding process when users interact with the app for the first time. Fintech apps require customers to share their sensitive banking or financial details. A well-designed Fintech app builds their trust experience and simplifies the process of information exchange. As more consumers switch to mobile banking in India, a good UX design can help them complete financial transactions while on the move. With maximum app performance, availability, and scalability, fintech companies can enable more customers to complete their tasks quickly and with fewer clicks (or taps).
Conclusion
Fintech startups are gaining more market acceptance in the Indian market. Their apps can deliver high-quality user experience with intuitive design and performance.
At Avekshaa, we focus on improving the performance, availability and scalability of business applications. Without app performance, fintech companies cannot acquire more customers and increase their user base. Learn more about our P-A-S (Performance, Availability, Scalability) approach to manage your complex business applications. And look through our successful case studies in the Banking and Financial sector.
Want to improve your application’s performance? Get in touch with us today.