Why have so many financial apps in the last few years?
In recent years, we have seen a new financial app come out every month. Many new players are launching financial apps, especially around personal finances. Also, traditional financial players like banks and brokerage houses have started rolling out apps around personal finance. There is a demand for a financial apps in India as financial literacy has increased.
However, the data suggest that there are way too many now. Also, there is a race to acquire as many customers as possible on the apps - even with high customer acquisition costs (CAC). Why? Today, let us understand the reasons behind it.
Financial apps: Changed how we manage to finance
At the root level, there is no denying that we needed a financial app - a good one. With a personal finance app on mobile, users save so much time and can do so much more. Today, you don't need to visit a bank as everything can be handled on the apps.
Earlier, budgeting was a tedious task. Hence, most people did not attempt it. With these financial apps, budgeting has become super easy. These apps have made money management possible for everyone.
Benefits of personal financial apps
Before we discuss the reasons for the financial app increase, we must understand the benefits. If you are not good at managing personal finances, use these apps to make the process easy. If you are not using these apps, you are missing out on the following benefits:
- The apps can help you track your expenses. It will help you know your unwanted or unnecessary spending, which you can bring down or cut in the future.
- Most financial apps are super easy and feature-rich. You can work with these apps even if you are uncomfortable using smartphones.
- Financial apps with financial planning features help you plan for your financial goals by helping you save and then invest in the right places.
Reasons for so many apps in the last few years
The number of financial apps has increased in recent years because of needs - user and business needs. We look at them separately.
As per a Google research report, smartphone users download around three personal finance apps to their mobile, with 4 in 10 using their devices for managing finances, checking account history, tracking investments, and paying bills, among other financial activities.
Covid & technology adoption: When Covid happened in early 2020, there was no way people could visit bank branches for financial assistance. The banking apps were a boon for everyone. The result was that people who kept themselves away from smartphones and technology started using an app for financial services. Companies saw this as an opportunity and started launching the app as more people were ready to use financial apps.
Financial literacy: Financial literacy in India is relatively low. However, in the last few years, there has been exponential growth in financial literacy. Financial apps are not only about money management, but these apps are a convenient way to learn about money and make informed decisions. With more people looking to learn, most financial apps come with a learning section.
User behavior: The pandemic was an eye-opener for most people. Those who lived without managing their finances had a tough time during and post-Covid - economic uncertainty. People realized the importance of having an emergency corpus, investments, and liquidity. Financial apps are helping users in this regard.
Demands for convenience: More users want to follow financial discipline, and these personal finance apps not only help them follow discipline but also help them manage income, investments, bills, and spending. Everything related to your personal finance is now at the tip of your fingers and gives users an uninterrupted and seamless experience - something today's users want in everything.
Data is the new oil. Therefore, businesses that have the highest user data have the largest valuations. Below are some reasons we've seen so many financial apps in recent years:
Gathering user information: As mentioned in the above section, users have a minimum of three apps on their smartphones. Most financial apps are free to use - no joining or yearly fee. The companies collect your personal financial details like bank account transactions, spending patterns, etc.
Using the data: With the available information, the companies can analyze user archetypes and provide personalized financial advice and related services. Such services are usually paid for since they are personalized.
Data analysis to the next level: The data can be employed to the next level of analysis using technology like Artificial Intelligence. The data or information that comes out after analysis is priceless. There are so that companies that do with your data, and hence more and more app launches.
The above reasons have led to the popularity and growth of financial apps in India and other countries. As a user, you must know what level of access you are given to all apps on your mobile. Second, only use trusted and popular apps when it comes to managing finances. Your data is gold for some, and everyone may want a piece of it.
Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: firstname.lastname@example.org. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Such representations are not indicative of future results. The securities quoted are exemplary and are not recommendatory. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.