How fintechs can leverage analytics to navigate the tech winter

It’s no secret that the tech industry has been going through a deep freeze, writes Shadi Rostami, Senior Vice President of Engineering, Amplitude.

However, despite the challenges surrounding investment and growth, the fintech sector shows signs of progress. Globally, fintech startups secured over $14 billion in VC funding in Q1 of 2023, and in the UK, 84% of people are currently using fintech products to manage their finances.

From these figures, it’s clear there is growth potential for products that provide essential services, like insurance and personal finance tools. However, acquiring and retaining fintech customers is easier said than done: fintech apps experience churn as high as 73% within the first week. While there’s no magic formula, there are clear steps that fintechs can take to optimise their product in order to improve the customer experience and boost loyalty.

Defrosting the onboarding experience

Fintech companies have a lot to juggle. Simultaneously balancing short-term wins with long-term value is no small feat. It’s crucial to get that first step into the product right, as it tells the customer exactly what kind of experience they’ll receive. Companies may think their onboarding process is streamlined and user-friendly, but consumers may hit friction points in surprising or unexpected places. To improve the onboarding experience, fintechs first need to align on what their onboarding goals are and how to make those measurable. Once measurement is in place, consider what the aha moment is that makes your product click for users. Customers want to quickly understand the value of your platform without too much of a lift on their end, so consider leveraging in-product prompts and workflow guides to help them along their journey.

Keeping warm with a customer retention strategy

To successfully build a customer retention strategy, you need to know what your customers are actually doing within the product—not just what they’re telling you they’re doing. Leveraging data analytics to get clear and detailed insights into customer behaviour will enable fintechs to perform targeted improvements and adjustments to their product in an efficient manner. This data can inform a churn prevention strategy to best pinpoint what is working well and where roadblocks and drop-off points exist. Cohort analysis is a great way to inform future strategy. Cohorts are groups of people defined by a shared characteristic, so you can group users into three distinct cohorts – acquisition, behavioural, and predictive – to understand the past, present, and future of user behaviour. From here, analysis can be conducted to identify which groups are likely to churn, informing where teams should take action to prevent this.

Fintechs can then use analytics to draw up a hypothesis of where they can improve the user journey to increase customer satisfaction and, ultimately, retention. By analysing existing data that details user behaviour, the hypothesis isn’t just a shot in the dark. Instead, it outlines the opportunities fintechs should capitalise on to improve the product experience. To further validate their hypotheses, fintechs can leverage A/B testing and other experimentation practices to see if product changes yield a change in behaviour in control versus treatment groups. With these insights, teams can understand which product changes resulted in the intended outcome and how to best replicate that journey for other customers.

Retention is the tip of the iceberg

The journey doesn’t end once pain points have been patched up. In fact, the customer experience journey never ends. Yet research has found that 25% of companies are concerned about not pivoting fast enough to meet a sudden change in customer needs. Consider the saying, “here today, gone tomorrow.” Customers who are using a product or service will no doubt experience a change in their needs, and if fintechs do not continuously experiment with their product to meet these shifts, then people won’t hesitate to move on.

A stagnant user experience doesn’t just signal what kind of experience a customer will receive, it also indicates to what extent the provider actually values them. And in a crowded fintech market? If customers feel that a product doesn’t meet their changing needs, they will take their business elsewhere. To avoid churn, fintechs need to identify the key metrics that matter most to their business in order to continually improve the customer experience. And companies may not be seeking high customer engagement in the traditional sense. Think of banking or investment key workflows, and understand how to best measure the effectiveness of those actions. Ask questions like: Can someone move money in under 15 seconds? Can someone easily navigate from checking their credit score to making a loan payment?

By continuously leveraging data to drive experimentation, fintech companies can quickly identify unmet needs and market gaps, allowing them to take the steps needed to gain a competitive advantage and keep retention rates high. It can also enable them to identify which incentives will best drive retention and offer tailored elements such as gamification and social interactions. For customers, a continuously improved and personalised product communicates the value the provider places on their experience. It also emphasises the importance placed on listening to users and responding accordingly. And a customer who feels valued and finds ongoing value in the product is more likely to remain loyal.

Achieving long-term customer retention and success requires a long-term strategy, and fintech companies are sitting on goldmines of data that will help them unlock new levels of growth. By knowing exactly how to leverage their data, fintechs can pinpoint their weak spots, learn how to improve them and chart out their next steps. And with their data being used to their highest advantage, they’ll have no problem keeping warm through the deep freeze.