From Retention To Stickiness: The Key To Building An End-To-End Digital Financial Product

Customer stickiness and customer retention may appear to be synonymous at first glance. The percentage of customers that continue to use your products and services, month after month or even year after year, is a measure of customer retention. But retention, on its own, doesn’t provide insight into why a customer continues to stay with your business.

You may be able to retain customers for a variety of reasons, ranging from a lack of competition to strong brand loyalty. Measuring stickiness can help you gain an understanding of ‘why’. 

Customers who are loyal to your brand or product are often the driving force behind repeat purchases. These are the customers who generate consistent and reliable revenue. So, the first step in developing any digital financial product is to understand what can turn a retained customer into a sticky one. 

Customer stickiness translates into lower churn rates, greater opportunities to upsell and cross-sell and growth. Plus, it creates brand advocates who will spread positive word-of-mouth about your brand.

The Challenge Of Going Digital

Cash has become digital, as has personal financial management. People no longer want to visit physical establishments for their financial needs, whether it is checking their account balance, paying for purchases or even applying for credit. This has brought exciting opportunities for fintech. But these opportunities have also intensified the competition to provide better solutions and customer experiences.

Now, customers are increasingly basing their satisfaction on their digital experiences with financial products and services. The quality of customer experience has, therefore, become the focus for fintech. Creating responsive and seamless digital experiences lie at the core of developing apps. 

In addition, allowing customers the facility to complete all their financial tasks from a single place proves invaluable in adding convenience to the overall experience. This is especially true against the backdrop of statistics that show that 68% of customers will shift to a different bank if they have a poor experience.

How Fintechs Are Overcoming This Challenge

To drive customer stickiness, fintechs need to enhance their customer experience. For this, fintechs are harnessing the power of data. Analytics is helping steer product development to intuitively meet customer needs and provide personalised support.

Moreover, AI/ML is helping refine app performance to respond to each user’s behaviour and preferences. It considers the user’s past interactions with the app, location and time of day to tailor recommendations regarding a service or app feature they might be interested in. 

For example, if a user tends to check their account balance at a particular time, the app could remind them to do so in advance. It could even remind users of payment due dates and recommend bill payment options. Such personalised interfaces can help enhance customer engagement and, therefore, stickiness for financial apps.

Enhancing Stickiness By Delivering Convenience

Offering the convenience of end-to-end digital solutions, where customers can access all services with a single app, cannot be overemphasised. This means facilitating access to all aspects of personal finance management in one place, from budgeting and seeking credit to making payments. Personalised interaction with the app will then be the cherry on top.

In fact, a fintech startup can set itself apart from the competition and demonstrate its commitment to customer well-being by offering tools that empower its app users to manage their finances better. It could also include educational resources to help customers make informed financial decisions. An all-inclusive app can also inform users about how they can use credit responsibly to enhance their lifestyle while accommodating flexible repayment plans.

The need for an all-inclusive app is further highlighted by the rising popularity of embedded finance. The embedded finance industry is expected to witness a CAGR of 36.3% from 2023 to 2029 in India alone, reaching a value of $23,451.6 Mn by 2029. Embedded finance brings the opportunity to transform traditional finance in a fully digital manner. With the ability to be integrated into an app that is accessible on a smartphone, it allows fintechs to reach the underserved populations in Tier 2 and 3 cities. This can prove to be a game-changer in driving financial inclusion.

In addition, embedded finance makes customised credit available with just a swipe of the finger. This can prove to be a key determinant that drives purchase behaviour among India’s price-conscious yet aspirational customer base.

The Bottom Line

Making payments, credit, investment and even financial education available on a single platform can be the key differentiator for a fintech. Today’s consumers value brands that demonstrate their customer-centricity and commitment to customer interests. 

Therefore, developing end-to-end financial products that make personal finance convenient can help fintechs build not just a sticky but a loyal customer base. Focusing on creating unparalleled CX while ensuring compliance with regulations will add stability to product development, eventually aiding fintechs in their pursuit of customer stickiness. 

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