Stealing a midnight snack just for you, sharing the latest gossip, providing a list of the things you forgot to order for a party, to lending a helping hand to organise your life—from the leaking kitchen pipe to the paperwork you dread to do.
If that description fits your closest friend, they sure have some competition around. And that’s not your next best friend, but the multiple apps on your mobile phone put together. It won’t be wrong to say that mobile apps have become an intrinsic part of most individuals’ lives, especially in the aftermath of the Covid-19 pandemic.
Among the apps that people added on their phones during the pandemic were financial apps, as people were forced to spend, save, borrow, and transact from their home. Those who had more time to explore and research or spare money turned to saving and investing, as well.
Some woke up to the need of budgeting and organising, while others were forced into borrowing. The friend they found in those trying times were financial apps.
According to the State of Mobile 2022 report from data.ai, a global digital trends research organisation, finance app downloads in India surpassed 1 billion in 2021, a 28 per cent year-on-year increase, while the total global financial apps download touched 5.9 billion.
Another report by global market research firm Forrester released in February 2022 says that eight out of 10 Indians in metros with a bank account use their mobile banking app at least once a month.
Those data pieces are not surprising given that a single individual these days is regularly using 5-6 financial apps.
Sample this: Pankaj Shaw, 25, from Howrah, who is an accounting and direct taxation executive, makes most of his payments via a Unified Payments Interface (UPI)-based app. He invests in stocks through a discount brokerage app, in mutual funds through another app, and ensures that he is updated on financial content and explainers through a third one.
Or take the example of Ramit Mahajan, 49, a supply chain professional from Mumbai. He uses two apps for banking accounts and two apps for equity investing. He also uses two more for mutual fund and insurance. “I use two apps for equity—Zerodha Kite and Groww—both are user friendly. I don’t want to put all my money in one app. I also use one for mutual fund—Zerodha Coin and two apps for insurance—Policybazaar and LIC,” says Mahajan.
Meanwhile, companies, too, have realised that apps are their best friends when it comes to taking their businesses to the next level. The Forrester report added that apps have redefined how customers engage with banks, accelerating digital transformation in banking.
The Evolution Of New-Age Financial Apps
Financial apps are not really a new phenomenon, but they have evolved on the back of new technology and the changing needs of customers and the financial landscape. The pandemic fuelled further innovations.
“It is clear that people have moved towards digital mediums after the pandemic. If we look at banking apps now, they provide video banking, while insurance apps provide video underwriting. Now you do not need to be physically present for such transactions unlike the case earlier, which means you will use the app more,” says Joydeep K Roy, Partner, India FS Advisory Leader, Global Health Insurance Practice Leader, PwC.
The first apps were “merely digitised” processes that were earlier non-digital, explains Roy. If there was a form to be filled, one could fill it on the phone; if there was an instruction to be given, one could give it through the phone.
In the last couple of years, especially since the pandemic, financial apps have added several layers of innovation on the back of technology.
Smoother Processes: Apps have taken a step ahead from merely digitising an earlier process to build something new that helps make processes smoother. For instance, a user who wants to make a motor insurance claim can simply take a photo of the damaged vehicle and upload it, without having to enter all the details once again.
Intuitive Suggestions: Most apps are now intuitive and assistive in nature, and offer suggestions based on the usage patterns. Remember those notifications from food apps to order out, or the one that nudges you to pay your bill or make a transfer by a certain deadline?
How do these apps do it? The answer lies in big data that helps them understand the needs of customers, including detailed information about their interaction preferences and behaviour.
Says Yashoraj Tyagi, chief technology officer and chief business officer, CASHe, a fintech company that provides personal loans: “We leverage data with various analytical tools that provide us with a 360-degree view of the customer journey, helping us gather crucial customer pain points and identifying opportunities to adapt the overall experience.”
New-age apps seek out information from usage patters to better understand user behaviour for targeted suggestions.
“There’s so much information which gets transmitted with every action that you do from the phone. So, it’s not just the information you’ve asked from the customer directly, but also so much metadata to fall back on. There’s an endeavour to use it and give more innovative services on the spot to the customers,” says Roy.
Customised Solutions: With increased adoption of predictive actions using artificial intelligence (AI) and machine learning (ML) across all stages of the transactions, there are more solutions that customers can now access.
“Another innovation we have seen is increased adoption of embedded financial products across more app categories to deliver tailor-made financial services products to customers. Also, Internet of Things (IoT)-based fintech use cases will help drive better risk management and customer relationship management,” says Jaikrishnan G., partner and head of financial services consulting, Grant Thornton Bharat, an accounting and advisory organisation.
“One major use case here would be that of auto insurers who can use IoT devices to capture indirect indicators, such as driving behaviour, to set premiums,” he says.
Roy adds: “Now there is more and more usage of the capabilities of the phone. For instance, for any photo taken, one can figure out the GPS coordinates of the place. So, if a photo is taken of an incident and an insurance claim is made, or a photo is taken of a property and sent for a loan, you don’t need to specify anything.”
Intersections In Daily Life
With lives becoming more fast-paced, we need to get a lot more done within a short time. Mobile apps are perfectly suited to meet this need. From booking taxis, ordering food, to shopping, to even doing our financial transactions online, for most urban dwellers, life without a set of mobile apps is unthinkable.
Financial apps cater to all the needs of busy parents Gaurav Das, 44, a scientist and his wife Sneha Bajpe, 44, a scientist, pizza maker and baker.
They do everything from transacting and banking to investing and insurance. They rely on Google Pay for their daily transactions, on ICICI Bank app for other banking needs, and invest in the National Pension System (NPS) through the Protean (NSDL e-Gov) app, while using the LIC app for their insurance needs.
Payments: Financial apps touch all aspects of our payments—from budgeting, to spending, to paying equated monthly instalments (EMIs) and investing.
Pune-based Abhisek Banerjee, 38, a human resources professional, and his wife, Mayuri Das, 35, a visual artist, reiterates how apps have eased their lives.
“About a decade ago, I had to worry about carrying cash, wondering how much money I should keep with me, and so on. But with these apps on my phone, I can walk out with just my mobile, as it has everything. I pay all my bills through apps now,” says Banerjee.
Das likes the fact that most of the apps also offer cashbacks or vouchers that can be used for other transactions.
Investing: In the past, financial apps were primarily used for tracking and managing expenses, creating budgets, and monitoring account balances. While these features are still available, financial apps now offer more.
“For instance, many apps now allow users to invest in a variety of assets, including stocks, bonds, mutual funds, and international investments. Some apps even offer personalised investment recommendations based on users’ risk tolerance and investment goals,” says Hemant Beniwal, certified financial planner and director at Ark Primary Advisors, a financial planning firm.
Saving And Financial Habits: While most brokerage firms, fund houses, and insurance companies have apps, there are also some that encourage smaller savings.
These include save now pay later apps, which encourage you to save regularly with, say, a travel agency for a travel goal.
Then there are apps that help you save the small change that you often ignore. So, if you are paying a bill of, say, `998, the app will help you invest the balance of `2 to the nearest round-off figure.
Some also let you create saving buckets for different goals, such as travel, buying a phone, etc., thus inculcating the habit of regular savings at the same time.
These apps can also play a role in changing the way people manage their money and inculcate habits of savings and investing.
Bengaluru-based B. Kranti Kumar, 32, who is in the cloud kitchen and food tech industry, invests in the domestic as well as global markets through Kite (Zerodha) and IndMoney apps.
But before investing, he goes to apps such as Finshots to understand financial concepts.
He also uses a small amount of money to experiment with upcoming new-age apps such as Multipl. “I wanted to buy furniture and really liked the concept of linking piggy bank savings with investments that Multipl offers. Also, if I save with them, I will get an additional discount from furniture brands. So, I created a goal there for a small amount, and as I gained trust, I increased my monthly contribution amount and created other goals as well.”
In the Jupiter app, he likes the “pots” idea, which lets him create pots for specific use cases, and also lets him earn interest from Federal Bank.
Here too, he initially created pots with smaller amounts and then created larger pots.
Borrowing: It’s not just the lenders, but even specific loan apps that can help you get quick loans when you find yourself in a crunch.
Some of these require less or no paperwork, depending on the amount of the loan required.
The most common among these are buy now pay later apps or schemes which essentially allow customers to buy something on credit without having to use a credit card, and pay in multiple instalments at a later date.
If the payments are made on time, no interest is charged, but when there is a default, an interest of 10-30 per cent is charged.
A word of caution though.
“Pay later apps make money by charging fees on late payment. If one is not diligent about paying the amount by the due date, then it would affect the credit score, or even worse, put one in a debt trap,” says Abhishek Kumar, founder and chief investment advisor at SahajMoney, a financial planning firm.
Tracking And Organising: One type of financial apps that have been around for a while now are budgeting apps that help one create a budget, track expenses, and encourage savings. These apps automatically track the users’ expenses and categorise them into different slots by tracking the messages.
They also have features that will help the user to set a budget so that one does not end up overspending. They also generate detailed reports so that one can see the spending at a glance.
Other apps, which are not specifically meant for this purpose, may offer similar facilities for other tasks.
For instance, through the PolicyBazaar app, customers can easily track their policy status, manage renewals, complete health check-up formalities, extend coverage on existing policies, and raise endorsements on existing policies and claim requests, says Anuj Kapur, head of product (apps), Policybazaar.com.
Security: Financial apps make our lives easier, but the biggest concern around them is security. Reports of online financial frauds through fake financial apps are all too common.
“From a user angle, it is important to check for authenticity before using any of these apps, and the terms and conditions before signing up. Instal these only from official app stores; avoid clicking on suspicious links, and don’t provide too much personal information. Use secure connections and immediately contact your bank in case of any doubts/queries,” says Jaikrishnan.
Also, many of these apps like digital loan apps and crypto platforms are not regulated, so in case of fraud or grievance, there is lack of clarity about the redressal mechanism.
“When you are using a new app, you should be careful before putting your banking details there. In such cases, I make sure I don’t put in all my details. I make it a one-time transaction only. I don’t save my card details on the app. Or if I am doing that, I make sure my bank asks for an OTP every time,” he adds.
While the onus to be safe lies on the app user, app developers are also leveraging technology to make app transactions safer for users.
“App developers can do this in two ways—by beefing up the actual security technologically, and by using the consent architecture so that customers feel secure that consent has been taken for every activity,” says Roy.
Privacy: When you sign up for an app and consent to giving your details, remember that you are not only exposing yourself to security concerns, but also privacy. The data collected by the app can be used to push products you may not need.
“Before signing up, the customers should understand how these apps make money. Many of these free apps make money by mining your data and using it to upsell other products or, by suggesting products that give annual commission,” says Kumar.
Genuine Advice: While some apps provide thorough financial advice, they may not always be accurate or take your financial circumstances into account while offering suggestions.
“Using a budgeting app, but not adjusting your spending habits accordingly, can lead to overspending,” says Beniwal.
Moreover, some apps may be AI-driven and may provide only generic advice. So, one needs to consult a financial planner.
Adds Kumar: “Robo advisory apps might give template-based advice and might not consider the particular circumstances of the person being advised. For example, in case of insufficient funds, the app may advise curtailing travel goals, but travel might be a non-negotiable goal for that individual.”
Decision-making: The apps may make it easier to spend and borrow. Buy now pay later apps may tempt you to buy the latest mobile which you may or may not need or be able to afford. A similar danger lies with personal loan apps, which may offer you a loan at a very high rate of interest, and need to be serviced regularly over many years.
Adds Beniwal: “While financial apps can be a helpful tool for managing your money, it is important to use them responsibly and be aware of their limitations. Remember that the ultimate decision-making is yours, and apps can’t replace your own research, knowledge, and judgement. It’s important to consult a financial planner if you have any doubts or need more specific advice tailored to your situation.”
The Way Ahead
The space for financial apps will only get more exciting in the days to come. Says Roy: “Usage of augmented reality, virtual reality, and metaverse will become common so you just don’t interact with the computer, but with multiple people in their avatars. You can enter a room, and see somebody is there, have a conversation, and have someone help you or guide you in taking your financial decisions.”
The other innovation that is already here, but not in a big way, are super apps, which will basically enable multiple tasks through a single app. The jury is still out on these though.
With Inputs From Neelanjit Das