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Economic instability has been ricocheting throughout the stock market in the wake of the global coronavirus pandemic. Its effects have been felt across all industries, with winners and losers’ across different sectors. So, how has fintech fared during this period? An industry which was coming off the back of a strong growth period as ‘neobanks’ exploded across the globe, they’ve given consumers the ability to invest, bank and make payments in real-time, on a hand-held device.
Half way into 2020, the global health crisis has exacerbated the boom, as consumers have been restricted to their homes. Data shows that overall time spent on our mobiles exploded during lockdown. Mobile app usage grew 40% year-over-year in the second quarter of 2020, even hitting an all-time high of over 200 billion hours during April. And what’s evident is that this time at home, amidst a climate of uncertainty has put consumers under pressure to take control of their finances. amidst a climate of uncertainty. As the neobanks are so much more reliable, being mobile-first – these apps are fast taking over the traditional legacy options. In fact, we saw the combined user base of the top 10 fintech apps experience a 20% increase in monthly active users - 5% more than top banking apps.
Japan, South Korea, the US and China saw the biggest uptick in time spent during the first week of March, compared to the last week of 2019 at 55%, 35%, 20% and 10% respectively. In the US, demand increased for the app that ‘democratized investing’, Robinhood, saw a 50% growth in iOS and Google Play downloads during the first half of March compared to the two weeks prior. In Japan, weekly time spent on Android phones in fintech app au PAY grew 20% week over week in the first week of March. During the same time period, fintech app PASS by SK TELECOM(구, T인증) in South Korea also grew 20% in weekly time spent.
The finance category on the app stores is broad reaching, with apps that facilitate everything from stock management and mobile banking to payments, so it makes sense that consumers are turning to them in an effort to restore some control and order during a period of chaos. Even before the pandemic, we had seen an increase in time spent in finance apps; globally, consumers accessed finance apps over 1 trillion times in 2019, up 100% from 2017.
However, while fintech apps can financially empower the consumer, the more time we spend in personal data on mobile, the more potential opportunities are created for cybersecurity breaches. According to BC7 venture partner and tech expert Monty Munford: "Apps have transformed the customer experience and received huge investment… customers will become more discerning, and it may be factors such as secure mobile cybersecurity that prove to be more important when choosing a mobile money app."
Capgemini Efma’s World FinTech Report 2019, which surveyed banks and fintech providers to find the most prevalent issues facing the financial services sector, reveals ‘security’ topped the list. In addition, a Facebook IQ report found that “for 60% of current account customers, trustworthiness is either the main or top criteria considered when choosing a bank or financial service.” The bolstering of GDPR and introduction of the California Consumer Privacy Act (CCPA) in the US demonstrates that governments are more vigilant than ever when it comes to user data.
The move to mobile money has already happened and we’ve even seen consumers harnessing the autonomy of mobile banking to fortify their own security. For example Postbank BestSign — an additional security app for Postbank — grew a phenomenal 9,300% year over year in downloads in Germany after a December 2018 launch. Similarly, banks are investing in insights into competitive features, honing in on security; Garanti Bank for example, invested in biometric security, such as face or fingerprint recognition, after data revealed them to be key features in competitors’ success.
Financial players are moving fast to keep pace with mobile innovation but with familiarity and reliability becoming the catalyst for user engagement, competition is coming from an unexpected direction: the tech giants. Apple rolled out its credit card in 2019 along with Google’s launch of checking accounts. Apps’ agility to adapt to data-led trends in consumer behaviour, coupled with security and reliability, will determine the fintech survivors of 2020; a year of unprecedented events. And what’s clear is that the industry is watching closely.