May 24, 2017
Without belittling the achievements of exceptions like Facebook, WeChat, Instagram and a few more apps consistently retaining a loyal audience, there are reasons to believe that apps as a class of products/solutions are inevitably moving into obsolescence.
Today, the US consumers spend five hours a day on mobile devices, and 92% of that time is spent in apps. However, out of that 92%, 19% – the biggest portion of time – is spent on Facebook, making this single app a fairly important gateway.
Furthermore, a different study suggests that nearly half (45%) of smartphone users’ app time is spent on their top app and 73% of their time is spent on the top three apps. Where does it leave all the other apps? It turns out, not in an envious position since a very limited number of apps ensure that one can perform any imaginable and unimaginable task – order a pizza, a cab, pay a friend, contact a brand’s customer service, check your bank balance, and more.
If the general numbers don't seem convincing, let's look at a particular vertical – financial apps. A 2015 Gallup study found that only 13% of adults in the US had digital wallets on their smartphones. Moreover, 76% of those who had a digital wallet have never used it or have almost never used it to make a purchase from a retailer in the past 30 days. As a result of an oversaturated payments apps market, disjoint experiences and disconnected islands of mobile payments solutions now serve as an obstacle to the whole segment to develop.
Image: Mobile Benchmarks, Q3 2016; World average; Time Spent is measured in seconds
Moreover, as social apps enrich their functionality over time to become universal, all-in-one platforms, financial apps other than mobile banking apps, will inevitably lose their relevance. Increased convenience, speed, and security of transactions offered by those apps will certainly contribute to the demise of single-purpose apps that are tailored to just one function.
Facebook is a perfect example – the company has been on a path to double down on a magic number of 1 billion users, where it would start the monetization game, and now, as the platform reaches close to 2 billion monthly active users, Mark Zuckerberg is aggressively moving from products to technologies for broad use cases, declaring the obsolescence not only for apps but for conventional physical interfaces (even the smartphone).
India’s UPI (a futuristic solution for the rest of the world) is a unique case among financial apps other than mobile banking apps, that proves further granulation of the market of single-purpose apps (payments apps, in particular) being futile.
While apps in general and B2B+finance apps don’t have the retention data in their corner, there is something important they can learn from successful social apps. After all, per session, business apps in the US, for example, perform poorly versus global rates on both iOS and Android devices and, significantly, it’s the only vertical to do so.
It appears that Facebook and the likes have a favorable position partially due to the sequence and the strategy of development. Focus on building the ecosystem first allowed the hottest social apps to get their foot in the door of other worlds, including the financial one. The hottest apps have an upper hand over single-focused newcomers because they have been building their small, but strong, words for years, retaining a loyal audience through social engagement.
In 2017, we are witnessing a perfect storm – hundreds of FinTech startups are launching apps following a perceived hot business opportunity, while social apps reached the level of maturity, wealth, and development to step up their game and get on financial turf.
In spite of all this, engagement is the key to a successful adoption and retention. In fact, studies suggest that 90% of the people who engage weekly for the first month after download are retained, compared to only 23% of people who don’t engage in the second, third and fourth week.
Moreover, 82% of customers who engage in week two are retained, but customers who don’t engage in week two have to engage in both week three and four to reach almost the same level of retention.