The first wave of banking and fintech apps got high marks for delivering features that allowed time-crunched users to tackle important tasks. But the next wave of personal finance apps is going one giant step better by not going it alone. Driven by the realization that there is real strength in numbers, smart fintech companies are pairing, partnering and joining forces to deliver apps that offer life solutions (not point solutions) aligned with users’ lifestyles, life stages and context at the magical “mobile moment” when they reach to their fiercely personal devices for seriously helpful assistance.
Tie-ups between Acorns – the fastest-growing micro-investing app in the U.S. with over 2 million investment accounts – and Clarity Money, the rapidly growing personal finance app with 450,000 users founded by Adam Dell, brother of Dell Technologies CEO Michael Dell, is the latest in a raft of announcements by fintech startups determined to redefine personal finance.
Revolut, the app-based digital only bank, announced a partnership with pension manager PensionBee, allowing Millennials to combine their pensions in one plan, adding more pensions as they switch jobs. Starling Bank in the U.K. became the first in the country to partner with Transferwise, giving Starling customers direct, in-app access to TransferWise’s money transfer services. Stock trading app Robinhood, which already teamed up with StockTwits’ real-time social network for the financial and investing community, added TradeIt to its roster of partners, ensuring users can view brokerage accounts, place trades, and fund their account without exiting the experience, no matter which broker they use.
The market is growing – but so is the competition as more fintech companies jockey for position to become the one-stop gateway for a range of financial needs through an even wider ecosystem enabled by apps.
It’s a flurry of activity aimed at filling the growing “experience gap” in what financial services offer, and what users have come to demand, observes Sameer Singh, industry analysis director at app market data provider App Annie. “Finance apps started out with an aim to solve very specific problems.” But narrow focus and rigid UI is on the way out as more fintech startups band together to break new ground with apps that put users back in control.
Little wonder that App Annie calls out finance apps as one of the two top app categories poised for massive growth (the other is mobile commerce). Drawing from data offered exclusively to Forbes, Singh notes “phenomenal growth” in app sessions. In the U.S. alone app sessions on Android are up 50% to reach nearly 22 billion, up from 14 billion in 2014. In Europe (including Russia and Turkey) app sessions on the Android platform increased a whopping 180% to reach over 55 billion sessions in 2016, up from just under 20 billion sessions in 2014. Overall, App Annie counts around “200 billion financial app sessions globally across iOS and Android.”
The market is growing – but so is the competition as more fintech companies (and even traditional banks) jockey for position to become what Singh calls “the one-stop gateway for a range of financial needs through an even wider ecosystem enabled by apps.”
Automated investing and smart savings
This is the ambitious plan in the mind of Noah Kerner, Acorns CEO. “A fundamental problem for consumers is that fintech is making the financial services space increasingly fractured,” he explains in an email response to my questions. “This means that a person may have five or more apps to manage their money. Since we all have limited time and patience, there will ultimately be a ‘re-bundling’ of services to meet the needs of the time-crunched consumer.”
Acorns’ overall strategy – and the partnership with Clarity Money – “follows that logic.”
In practice, the Acorns app, which targets users with under $100,000 household income, allows users to invest spare change from everyday purchases. (In the background, so-called “smart portfolio algorithms” help users accumulate wealth and automatically invest in a low-cost diversified portfolio of exchange-traded funds offered by top asset managers, including Vanguard and Blackrock.) Acorns, which recently completed a $70 million series D round, is on track to do 1 billion trades in 2017.
Launched just last year, the Clarity Money personal finance mobile app uses artificial intelligence and data science to make “smarter” financial decisions. In practice, Clarity Money analyzes its users’ financial habits and makes suggestions on how they might save money. Some features include canceling wasteful subscriptions, lowering bills, finding users better credit cards, getting users’ credit scores and creating savings accounts.
The two apps combined take a lot of the friction out of saving and investing. On one hand, Clarity Money users can use Acorns’ automated investing features, which round up purchases made on their debit and credit cards (for example, turning a purchase of $8.46 to $9.00 and investing the additional $0.54 into a diversified portfolio of ETFs). On the other, Acorns’ users can see a snapshot of their investing activity in the Clarity Money app.
But the really interesting aspect of the partnership comes when we look at the boost it can provide Acorns’ cash forward rewards program, known as Found Money. Launched in May 2016, the program has morphed into a kind of live demand generation platform, allowing brands popular with Millennials – including Casper, Dollar Shave Club, Nike, Warby and Airbnb – to get in on the action when Acorns’ investors make purchases. In other words, when users shop with the partner brands, they get a direct investment into their Acorns account, shifting rewards from a cash back to a “cash forward” benefit. (Kerner tells me Acorns’ brand partners have invested over $1 million into customer accounts to date.)
Keep it simple – and real
Making it super-simple to set aside money is a natural fit with Millennials, a demographic that demands apps that take the complexity out of personal finance. But marketers need more than a compelling value proposition to drive downloads and – ultimately – lasting loyalty among mobile-first Millennials. They have to deliver clear, consistent and contextual campaigns that are compelling, not overwhelming.
Instead of hitting them over the head with the wisdom of a long-term objective, we hit on their daily habits.
This is the view of Marc Atiyeh, Chief Strategy Officer at Clarity Money and a Mobile Hero recognized for his expertise in user acquisition and mobile effectiveness by Liftoff, a performance-based app marketing and retargeting platform. At 25, Atiyeh certainly has the inside track on what flies and fails with his fellow Millennials. It’s a big part of the strategy that has allowed Clarity Money to hit 500,000 users eight months after launching the app, and set its sights on reaching a total of 5 million users by end-2018.
Millennials also respond to advertising that suggests but never demands. As Khan put it during our podcast interview, that means helpful messaging and no-brainer ad creatives. In fact, one of Acorns’ most successful campaigns to date on Facebook showed a simple cup of coffee. Instead of hitting them over the head with the wisdom of a long-term objective, we hit on their daily habits,” he says. “It gently reminds them that they could be saving and investing with every cup they buy.”
At the same time, financial apps have to be loud and proud, using the formats (video) and networks (social) that Millennials can’t get enough of in their daily routine. It’s what motivated Acorns to produce Grow Your Oak, a catchy 30-second clip (and song) it produced for Snapchat that counts 2.5+ million views on YouTube and a raft of overwhelmingly positive reviews. (His tip: Experiment with all networks and craft a message that takes full advantage of the “persona” of that particular platform. A great example is Pinterest. By viewing it as a search network, not a social network, Khan zeroes in on user intent and boosts user engagement with hyper-relevant advertising. In this scenario, a user checking out wedding dresses on Pinterest sends a sure signal that marriage and saving for the future with their partner is very likely very high on their radar.)
It makes sense for financial apps to focus on acquiring and engaging Millennials first, a segment accustomed to mobile and apps. But it’s also important for fintech companies to widen their net as these apps gain traction. “Finance apps are where shopping apps were a few years ago,” notes App Annie’s Singh. Indeed, we’re nearing the tipping point in a market where a broad range of consumers are underserved and underwhelmed by their financial services experiences. The pressure is on fintech companies to join forces – and integrate their apps – if their businesses and their users are to prosper.