How to Build Trust in Your Fintech App
Consumers trust their personal data to dozens of apps, and the biggest data-grabbers continue to face lawsuits over privacy and data protection concerns. With fintech, trust issues are more pressing than in any other field: digital products that handle people’s money are directly linked to their financial wellbeing, so trust is essential.
What businesses need to learn is how to make their solutions trustworthy and to communicate data collection issues with transparency so that customers can understand what’s happening with their information and how they can benefit from it.
A recent Clario report shows that among the apps that know the most about their users, the majority collect banking details and other sensitive information:
Even though social media-like applications spy on our lives the most, PayPal, Coinbase, and other fintech solutions can be spotted in that list.
It’s somehow both scary and normal to us these days — the reality of surveillance capitalism is that to give users the most personalised experiences and second-guess their needs before they even realise them, digital solutions learn who their users are and what they prefer.
So how do you build trust with customers in a fintech product? In this post, we look at the key aspects in fintech app development that influence how trustworthy users deem the end product. We also analyse the best industry practices around making data usage within apps transparent, another factor that affects perceptions of trust.
Do people trust fintechs?
A 2021 poll conducted by Morning Consult revealed that consumers trust fintech companies much less than traditional financial institutions like banks or insurance providers (even though it’s hard to assess if respondents included banking apps and insurance mobile apps in these categories or classified them as fintechs):
Source: Morning Consult
Part of the reason is that the fintech industry is still very young and not that well established. In fact, most respondents didn’t have an opinion as to whether they would trust financial technology companies. Perhaps the question should be: do people know fintechs well enough to trust them?
The lesson we can learn here is that growth in the fintech sector doesn’t equate to equal growth in knowledge and awareness of how fintech apps work, what data they can access, and what problems they can cause. It’s not enough to introduce new solutions and it’s not even a question of making them super easy to use — as important as these things are, providing precise privacy and security policies is much more fundamental.
Proven practices that build trust in fintech apps
As Andrew Wilde puts it, there are four major areas of concern that push users away from fintech:
- Fear of the unknown. The field is still very new and is trying to adjust to the growing demands in interactivity and innovation. Younger generations are likelier to embrace new solutions, however, this doesn’t mean they’re financially literate enough to assess all the associated risks.
- Sector scandals. Many notorious cases undermine the credibility of fintech: personal data is being sold to third parties, frauds lead to colossal thefts and other negative consequences.
- Limited regulation. Fragmentation and loops in regulatory systems make data rule violations possible. On the one hand, it’s hard to enter the fintech market because of multiple requirements controlled by different regulatory bodies, but on the other hand, some industry players manage to cheat the system.
- Data privacy. The more digitised the world becomes, the more data security issues appear on the horizon. In fintech, the lack of data protection is at the core of all major problems, accordingly, it’s of critical importance to any app owner who wants to gain trust and build authority.
Let’s see how fintech apps can address these issues.
Adopt the latest security practices
In 2019, 70 per cent of financial companies reported a cybersecurity attack and considered this issue their most pressing concern. A 2020 Cemla report showed that every fifth cyber attack in the world concerns the financial industry. Moreover, the pandemic meant a 238 per cent rise to attacks on banks and financial companies in 2020 as criminals seek to profit from the change in conditions. The Financial Times went so far as to call Covid-19 a “gift to cyber criminals.”
The only way to deal with the increasingly tricky safety threats is to build products with the strongest security practices in mind and hire engineers who truly understand the industry. Here are the must-have actions to take when developing a fintech app:
- Use multi-factor authentication by default
- Incorporate biometric authorisation
- Provide automatic log-outs in response to periods of inactivity
- Encrypt data on both the client and server side according to the latest standards
- Ensure protection against jailbreaking
- Run regular risk assessments and update security measures according to any new concerns
All the above are what MadAppGang does when working on fintech app development. We’ve been building web and mobile apps for banks and fintech startups for over a decade, continuously polishing the security techniques in line with technological advancement and cyber threat progressions.
Any fintech application collects user data because otherwise, it will be useless and unable to perform financial operations. The focus here is to provide maximum transparency and guidance on what information is collected and how it is being used:
- Ask permission for any data your app collects and articulate it very well. As research shows, almost a quarter of Europeans believe that open banking means taking their data without consent, so make sure to use simple language and clear up all the terms.
- Speaking of onboarding, prodive clear steps explaining each and every piece of data you’re asking for so that users can rest assured they’re taken care of and the product they’re using is reliable.
- The same goes for third-party integrations. They are extremely helpful in the fintech sector, but if the app doesn’t give a valid reason for requesting data sync, it may erode trust. Even when making a budget app that doesn’t involve financial operations, clearly articulate the information you collect. Name-drop all the services your app integrates with and highlight what data will be used and for which purposes.
- Stay transparent about your pricing options: any fees should not be hidden but rather highlighted and any changes should be announced in advance.
- Last but not least, broadcast your regulatory compliance: show information on your certification, adopted AML/KYC policies, and so on.
Source: Lightning Social Ventures
For example, this is how the Lightning Social Ventures app establishes customer trust during the onboarding process:
- It explains that it uses the Plaid service to integrate with credit card companies so users can connect their accounts. The app also provides a link to the service.
- It provides a link to more detailed information about how connections to bank accounts happen and what personal data is involved.
- The app shares a positive security-related message to users and gives the opportunity to scroll further to learn about the app’s features and policies.
Every process that takes place in a fintech app should be easily understood at any given moment. Incorporating educational materials along with hints and tips surrounding all the available functions is among the best ways to earn trust from customers.
Explaining how everything works may seem like over the top transparency, but this is exactly what you need with fintech apps. Even the slightest complication in the interface leads to a lack of trust and understanding. The notorious Robinhood case, in which the app’s interface led to a user’s suicide, shocked the public: there was a temporary negative balance displayed before it was corrected due to stock crediting practice, and the app failed to explain how these things work.
The app was heavily criticised and people pointed out that instead of making the interface more educational and easy to understand, Robinhood was going for fun design elements like confetti popping on the screen after a trade. While fun is fundamentally good in app design, and it can be especially successful in fintech, where serious matters can be handled with a bit of entertaining elements, it shouldn’t overshadow the essential functionality.
Integrate additional safety measures in the UX
Some security features might feel redundant or intrusive but they are needed in apps dealing with finances. For instance, when an app meant for entertainment asks the user to sign in every time or deactivate any action after a certain period of time, it will irritate the user. But when it comes to money and personal data protection, such measures are perceived as normal and engender trust.
The same goes for notifications. Many notifications, both in-app and duplicated via email or text, might seem excessive, but as with additional authentication measures, multiple automatic notifications about every account activity is a necessity in a fintech app.
While writing about fintech app security features, Suzanne Scacca tested several apps, in particular, checking their practices of sending security codes via text. It turned out that some SMSs were not recognisable at all and some included the security code in a way that could be seen without even opening the message:
Source: Suzanne Scacca
The best practices spotted in this experiment included providing additional tips on how to use the code and when to trust it, limiting the time for using the code, and reminding people not to share the code.
Providing additional safety-related tips is never redundant when creating a mobile payment app or another fintech solution. For example, it makes sense to remind users to double-check the contact info prior to making a peer-to-peer transaction. Here’s how the Zelle apps incorporates advice on the screen for adding a recipient:
Follow human-centered design principles
Human-centred design, which aims to cater to the needs of people to the full possible extent, is a vital trend in app development. The key here is to empathise with your users — and to do so, learn about them prior to development. User journey maps are the ticket to success for any software, but with fintech, they can become a life-saver.
Before crafting your app’s functionality, start with people: interview your potential users to learn about their pain points and wishes. Then, when in development, go through iterations tested on real users so that the end product actually corresponds to their needs.
Comply with regulations
To make a trustworthy fintech app, you need to learn about the regulations beforehand and have a solid compliance plan and monitoring. The industry is expanding but the regulatory framework is still very fragmented, contains gaps, and is hard to fully grasp.
Fintech regulations vary by location, so the first thing you should do is pinpoint the regulatory authorities in the countries you’re targeting, their areas of responsibility, and what they oversee in regards to your envisioned functionalities. It’s a good idea to hire a compliance consultant to make sure that every requirement is met.
It’s also important to look for development teams that have built fintech solutions for your target audience. For instance, if you want to target users from Australia, explore service providers’ portfolios to see if they’ve worked with products in this location. The more relevant the development team’s expertise, the easier it is to create a product that meets all the legal requirements and real fintech client needs.
Be prepared to recover
There are so many data privacy scandals that there’s hardly a single white-handed fintech solution. Some apps sell user data or use personal data without permission, data breaches and ransomware attacks affect millions of accounts every year, and potential vulnerabilities are only continuing to grow in number.
While it’s essential to protect your app from any type of unsecure activity, bad things like hacker attacks or data leaks might happen anyway. It’s a good thing to have risk management and recovery plans in place so that you can save your fintech brand and product after any unfortunate incident. It’s clear why it’s important to build trust with customers, but the less obvious thing is that this process is continuous, and even established trust won’t necessarily last forever.
To sum up
Trust is the meat and potatoes of any digital solution. Building trust in fintech takes a lot of combined effort and time: you need to learn about your potential users, the markets you’re about to enter, regulatory players, all the required policies, possible risks, and so on.
To play safe and build trust with customers, ask yourself the following questions:
- What tasks do your product features help to solve?
- What can you do for users to understand your features fully?
- How do you collect and use data?
- How do you ask permissions for data collection?
- What integrations do you plan on using and how will you inform users about them?
- What privacy policies do you have in place?
- How do you integrate AML/KYC practices?
- What activities should you monitor and report to authorities?
- Do you have a risk management plan?
- What messaging and tone do you use to make users feel their processes are taken care of?
- Finally, does the development and design team you’re going to partner with know about the intricacies of fintech app development for your target area and with your desired features in mind?
When you find answers to all of those questions, you can rest assured you’ll build a high-quality product that meets all industry standards, consumer expectations, and your vision.
Reach out to MadAppGang with your fintech app idea, and our team will contact you shortly to discuss the scope of development and potential challenges. Our team has been developing solutions across various industries and fintech in particular, and we know what it takes to gain user trust with your app.