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New insights into banking apps from billions of installs

The banking industry needs to leverage customer feedback to improve app adoption and customer retention levels.

Sep 6, 2023 / Technology

Banking apps are fundamentally different from other finance sectors, as shown in the Alchemer 2023 Mobile Customer Engagement Benchmark Report. Customers in the banking category have different motivations and usage patterns than other finance categories, such as fintech and insurance.

While banking customers are somewhat trapped by the effort and cost of changing banking apps, they still need help and the ability to provide input. Acting on their feedback gives banks and credit unions higher retention rates and better rankings and reviews—two key factors in whether an app is downloaded.

The 2023 Mobile Customer Engagement Benchmark Report compiles data from more than 1.2 billion app installs from Alchemer Mobile customers and app users. As it does every year, the report provides unique insights into mobile customer behavior and what gets people to act.

Top challenges for banking apps

According to BAI research, the client digital experience is a top challenge each year, and consumers rate improving the omnichannel experience as the best way to improve their banking experience.

Unhappy consumers have retention rates just one percentage point lower than fans. This means that while customers at risk are unhappy, they’re invested in making the app better, probably because it’s hard to switch banks. Most will continue, despite their dissatisfaction with the app.

Customer retention

Banking apps typically have high retention rates. The app category had 30-day retention rates of 85% (versus 67% overall), 90-day retention of 78% (58% overall) and annual retention of 60% (42% overall). However, when banking apps asked customers for reviews, 90-day retention grew to 91%. Banks and credit unions that listen and respond to customers improve retention rates and reduce churn.

Customer sentiment

Positive customer sentiment for banking was 79%, well above the overall benchmark of 64%. The high cost of switching contributes to good retention but doesn’t ensure positive sentiment. Mobile teams proactively asking for in-app feedback are better able to keep customers engaged. This feedback can also help validate features and prioritize the product roadmap.

Many brands find that unhappy consumers are one of the best feedback sources to validate features and prioritize their omnichannel product roadmap because they have a vested interest in making the app better.

Ratings, reviews and the differences between iOS and Android customers

Research shows that apps with four or more stars are 89% more likely to be downloaded. However, according to Statista, as of March 2023, 83.3% of apps had a rating of less than three out of five stars. iOS users were generally happier with apps than Android users; however, Android customers left, on average, six times as many reviews as iOS customers. In general, Android users tend to be less generous with stars than iOS users but more willing to write reviews.

Key findings: Not replying is bad for business

Companies that don’t respond to feedback (close the loop) increase their churn by a minimum of 2.1% every year. However, companies that close the loop with customers reduce their churn by a minimum of 2.3% annually, according to CustomerGauge. Naturally, that’s easier said than done. While nearly 90% of VoC and CX programs use surveys, according to Forrester, less than 40% have a formal process for closing the loop.

The brands with a high response rate reconnected with consumers after receiving feedback. Customers are 21% more likely to answer the next survey if you’ve closed the loop before. Closing the loop can be as simple as asking consumers what they liked, what they didn’t like or what they would prefer. It doesn’t have to mean dedicating people to one-to-one conversations with each consumer; many of the companies receiving high response rates have preprogrammed follow-up questions based on the survey results.

Key findings: Stay focused on keeping customers

Although banking apps are fundamentally different from other finance sectors, mobile app retention will remain an essential metric across the banking industry. Acquiring new customers can cost five times more than retaining existing ones, causing mobile product owners to prioritize listening to keep customers. Additionally, the success rate of selling to an existing customer is 60–70%, versus 5–20% for new customers.

In 2023, banking product owners and managers need tools to understand why customers churn and develop programs to improve adoption and retention. Mobile product managers need to drive the successful acquisition, adoption and retention of their mobile apps. Collecting customer feedback over time also helps with customer adoption. However, smart mobile banking product owners will take the next step to respond with messages, promotions and surveys to improve or better seize the opportunity and drive ongoing customer retention.

Robi Ganguly is GM of Alchemer Mobile, a customer feedback product that can be integrated natively with mobile apps. Early in his career, Robi learned that collecting customer feedback without acting on it is useless and ultimately damaging to a company’s brand. This is why he founded Apptentive in 2011 with the goal of giving customers a voice that is heard and responded to. He joined Alchemer in 2023 to continue executing on that mission. Prior to Apptentive, Robi held senior roles at Yahoo, WebEx and Deutsche Bank. He is a graduate of Pomona College.