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Here’s why retail and fintech should adopt a mobile-first strategy

Did you know that global app store consumer spend reached US$101b in 2018? That’s a 75% increase compared with 2016. This doesn’t even include in-app advertising or transactions processed externally such as paying for an Uber.

In fact, Australia is ahead of Germany, France and Canada for iOS consumer spend, and ahead of Russia on Google Play.

According to App Annie’s State of Mobile 2019 report, this is due in large part to mobile markets maturing in countries like the USA, China and Australia. Usage, interaction and engagement habits are now fully formed, taking over mindshare for consumers and opening up monetisation opportunities.

What’s more, time spent in apps has also risen exponentially, with the average mature market user now spending nearly three hours a day in mobile apps. This is fuelled by cumulative micro-moments – periodic sessions throughout the day where consumers look at their emails, browse news articles or check their banking.

This represents a massive opportunity for many industries in Australia, not least the retail and fintech sectors, where recent trends suggest that the biggest winners will be those with a mobile-first strategy. Here’s why:

Time spent in shopping apps directly correlates with e-commerce sales

It is fair to say that 2018 marked a turning point for both consumer behaviour and corporate policy towards retail activity on mobile. Digital sales in particular witnessed a strong correlation with mobile engagement as consumers felt more comfortable and confident making in-app purchases.

Mobile Fueled Flash Sales and Shopping Events to Record Levels in 2018 – Mobile was responsible for 34% of revenue on Black Friday and Cyber Monday.

State of Mobile 2019, App Annie

High-profile retailers in the US, including Walmart and Target, have gone one step further by leveraging the power of mobile for accessible loyalty programs, point-of-sale payments, in-store efficiencies, product information, in-store mapping and purchase fulfilment.

For example, Walmart’s ‘Check Out With Me’ service involves store staff wearing a small carrying case equipped with a Bluetooth receipt printer, and a mobile device that works as both a barcode scanner and credit card swiper for transactions.

This avoids the need for customers to carry heavy items to the checkout and then their car. Instead, staff members are able to scan the item on the shelf, take payment, provide a receipt, and have the item delivered to the customer’s car.

Target’s ‘Skip the Line’ solution also gives staff handheld devices to scan merchandise and process payments, with the added functionality of placing orders online if the store doesn’t carry an item the customer wants.

These innovations and advances have helped traditional brick-and-mortar stores close the gap on digital-first retail apps, which saw 1.5 – 3x more average sessions per user.

Globally, November 2018 marked the biggest mobile shopping month of all time by total time spent. Sessions — akin to foot traffic — grew 65% globally over 2 years.

State of Mobile 2019, App Annie

By embracing digital transformation with both consumer- and employee-facing technology, even brick-and-mortar retailers will be able to seize their share of an ecommerce market where nearly 75% of transactions are predicted to come from mobile by 2021.

Fintech activities now as popular as checking email, social posts, shopping etc.

Last year also marked a turning point for fintech apps, as they carved out larger user bases and fostered habit-forming behaviours. They also witnessed a growth in sessions, indicating the stickiness of fintech services and their ability to become regular habits similar to checking emails and browsing products.

Global Downloads of Finance Apps Hit 3.4b in 2018, up 75% from 2016, fuelled in Australia by microloan alternatives to credit cards (AfterPay).

State of Mobile 2019, App Annie

One standout example of fintech growth in 2018 was PayPay – an app created in partnership by Japan’s Softbank and India-based PayTm, which allows users to pay in-store by scanning a QR code linked to a Yahoo! Wallet account.

Since launching in October 2018, its weekly active users grew 46x over the four weeks ending the week of 2nd December 2018. Even though part of PayPay’s success is a 20% cash back promotion to encourage adoption, the frictionless experience and convenience offered through mobile is helping Softbank and PayTM effortlessly integrate into the daily smartphone habits of consumers.

“Users in Australia checked their bank apps nearly 10x per week, fueled by an embedded culture of peer-to-peer transfers within banking apps.”

Another impressive offering in the Fintech space is Venmo – a debit card with a mobile app-only application process. More than 40 million people have used the PayPal-owned app in the past 12 months, with total payments volume growing 73% year-on-year to $21b in the first quarter of 2019.

“Venmo continues its significant momentum,” PayPal CEO Dan Schulman said on a call with analysts. “As user growth continues to accelerate, merchants are increasingly turning to Venmo as a way to attract a valuable and engaged consumer base.”

By choosing a mobile-first strategy, fintech companies will be perfectly positioned to challenge the traditional retail banking industry, especially if user adoption rates are equally as impressive as recent app offerings.

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