By Raviteja Dodda, co-founder and CEO, MoEngage
Financial service apps witnessed a significant surge in adoption and usage during the pandemic. The research report titled “The State of Mobile Finance 2021” backs this claim. The report suggests that the industry saw a 15.2% year-on-year growth in downloads and a 63% increase in the time spent on such apps. The report also states, “Users across all generations increased the time spent on finance and trading apps, with Gen Z spending nearly 127% more time in-app to track investments.”
Understand their motivations: What drives Millennials and Gen Z to use financial services apps?
Millennials and Gen Z form a massive part of the demographic for any industry. Retail, food delivery apps, and OTT streaming platforms have extensively engaged with them and reaped significant benefits due to their acceptance of digital channels. Financial Services players, however, haven’t optimally engaged with them, to their own detriment.
In an industry now functioning in a digital-as-default environment, tech native millennials and Gen Z are crucial to unlocking exponential growth in the finance sector. With job security taking a hit during the pandemic, most Millennial and Gen Z populations turned to investing and saving more. The Gen Z population grew up during a recession, making them more financially aware. As such, they’re a very marketable sweet spot for financial services companies. But engaging with them requires a more strategic, data-driven approach than prior generations.
According to Goldman Sachs, more than 90M millennials will soon be in their “prime spending years,” making them an influential and fertile segment for financial services apps.
During the pandemic, personal finance apps were among the most used apps, after e-commerce, entertainment, and music apps. This indicates that financial services companies have customers from these segments and have achieved mass adoption; however, sustained customer retention efforts often pose a challenge.
Creating meaningful experiences
We’ve established that both Gen Z and Millennials are interested in the innovation and convenience that the financial service apps now provide. How, then, do marketers ensure that these customers engage consistently and eventually become brand advocates?
Here are a few strategies that will facilitate the acquisition and retention of your millennial and Gen Z customers.
- The personalisation payoff: Personalisation needs to be a holistic and channel-agnostic approach. Marketers must strive to collect data from all sources, offline and online, to build a unified customer profile. This profile needs to take into account their preferences, interaction history with you, and behaviour. For example, marketing personal finance apps to baby boomers who, before the pandemic, wouldn’t have preferred using a digital channel would have a different approach to marketing for Gen Z. Baby boomers had to learn to use these apps on their own. In this case, sharing educational content, how-to videos, etc., would be an effective strategy.
The same approach wouldn’t fit Gen Z and millennial customers. They have an interest and an appetite for learning about new digital offerings and are open to using them. Marketers should share content about new offerings, features, and personalised assets based on their interests.
To understand the personalization approach at Kredivo, we spoke to Alethia Tan, Head of Growth at Kredivo. Explaining her practice, she said, “Being a buy/now pay later platform, the kind of media, content, and channels that Kredivo uses to engage different age groups varies. There are differences even within the same age demographic. Data analytics-backed insights play a crucial role in determining how to engage customers. For example, while targeting baby boomers, it is imperative to understand their financial preference and incentivize purchase intent by ensuring the right information is being conveyed.”
- Value-based purchases: Gen Z and millennials are very mindful of what the brand stands for before buying from them or engaging with them. A recent customer culture report stated 83% of millennials want brands to align with their values. 65% of them boycotted brands they previously purchased from because of their negative or no stance on the values they believed in.
According to the “The State of Mobile Finance 2021” report, community and challenger banks are adding real value by offering differentiated services like paying account holders a day or two earlier, which is of immense importance to those living paycheck-to-paycheck. Community banks such as CapWay, First Boulevard, OneUnited Bank, and Urban One focus on the Black and African American community. The surge in popularity of digital banking platforms like Daylight focussed on serving the LGBTQ community, and Oxygen, focussed on helping freelancers, further underlines the demand for these online-only banks, catering to a particular demographic or population with the potential to become a full-service bank.
- Prelaunch buzz: Gen Z and millennials may have been quick to move away from traditional finance channels and accept digital ones. However, this doesn’t change the underlying expectations from platforms that handle their money: Trust and credibility.
In the industry that deals primarily with sensitive personal financial information, building trust and credibility is vital. Building trust cannot be a rushed effort; it must be thorough, well planned, and consistent.
The first and arguably the most crucial step that will build a base for you is your launch. Strategies to start building a trustworthy brand image start there. However, this target segment will drop you like a bad habit if they get bored, and finance is a dry subject. You have to offer them something more memorable than a trust-inspiring, pastel-coloured website to connect with them. A great example of a financial services player creating content to connect with millennials and Gen Z is Wealthsimple. The online investment platform produced content to refute the general notion that investments are boring. They came up with brilliant content pieces that combined knowledge sharing with wit. Their campaigns like “A Totally-Not-Boring Guide to Life Insurance” and “Ask Lizzie: Can I Personal Finance My Way Out of a Career of Discrimination?” give valuable information with a good dash of humour.
- Referral and loyalty programs. Referral Campaigns are a great way of getting loyal customers to pull more into your business. It helps your brand acquire new customers and strengthens your relationship with those who bring you the reference. Millennials and Gen Z buy more with brands that have good peer reviews. A friend or family member asking them to sign up is likely to work better than you emailing them to do so.
Boasting more than 13 million active users, with 3 million onboarded in just the first four months of 2020, the scale of investment and trading app Robinhood grew is commendable. So, how did they do it?
The free trading app played to the customer’s hard-wired need to get ahead in a queue through their well-thought-out referral program. The concept was simple; if someone had signed up for the app, they’d be put on a waitlist and shown what number they hold in the list. You could get ahead in the list if you refer or invite consumers to join. The more consumers you invite, the further you get. Brilliant, isn’t it!
- Use social media and influencer marketing: Since this segment is highly active on social media, most of the content they consume is “Influencer” generated. Using influencer marketing and social media are great ways to engage with your customer where they are present. The “Smoooth Payment” campaign (extra emphasis on the o) was a great example of quirky influencer marketing. To rebrand the payment and shopping service pulled in the rapper Snoop Dogg as a brand ambassador endorsing “Smooth Payments” while being crowned “Smooth Dogg.” The campaign helped Klarna become the top trending shopping app on Google Play and added 16 million “cool kids.”
Revolut, a banking service and a prepaid credit card provider targeting millennials, used Instagram since most customers on the social media platform are millennials. They used Insta stories by tagging Revolut card customers. They activate your FOMO by showing a large number of consumers using the card and you missing out.
- Gamification: Building on the “make fintech apps fun theme,” gamification is a great way to engage and retain millennials and Gen Z customers. Cryptocurrency brands like BlockFi have aced their gamification strategy. BlockFi offers customers bitcoin packs for every dollar they spend on credit cards, keeping them engaged and getting them to return to the app. Companies like Fold and PrizePool, which gamify spending, are doing great, with PrizePool observing a 75% growth in monthly active usage in Q4 of 2020 going into 2021. Fold observed a 310% growth in daily active users, 53% growth in monthly active users, and a 220% increase in downloads. The aim here is to retain customers through gamification and incentives, especially since saving can be a monotonous pursuit.
Brands have to employ a customer-first approach to engagement to capitalize on this pandemic accelerated adoption of financial services apps and draw endless benefits from it. Brands that use data to understand customer behaviour trends and preferences will sustain this success and retain more customers.
About the author
Raviteja “Ravi” Dodda is the co-founder and CEO of MoEngage, an insights-driven customer engagement platform. Ravi has more than ten years of experience in leading global teams and managing successful technology products. Prior to MoEngage, he co-founded and built DelightCircle, a local offers mobile app. Ravi has been recognized in the BW Disrupt 40 Under 40 and Forbes 30 under 30 lists.