fintech app

How to measure the return on investment of a Fintech app 

As you know, all fintech companies help users access, manage, and optimize their finances through credit, loans, payments, investments, budgeting, and more. This means the mobile app industry is expanding like never before, becoming a potential success and a way to profit.  

For that reason, it is essential to understand what fintech ROI is and how to measure it because the success of your mobile app will depend on it.   

Remember that every app is launched as a business solution, so it is expected to make consistent earnings through its user audience.  

So, let’s understand what ROI means in mobile app development:  

ROI stands for return on investment and is a critical metric that evaluates the profitability and efficiency of an investment. Calculating the ROI is essential to understanding the overall success of their efforts. It serves as the mirror to showcase the results of all your efforts in developing app features. It is obtained by comparing your expenses against the revenue earned within a specific time frame.  

Formula to measure the ROI of an app  

We know that sometimes mathematics is only for some, so we will show you the two main methods to determine the return on investment.  

– The first one is the result of dividing the net return on investment by the investment cost and multiplying this number by 100%.  

– The second one is the result of finding the net return of investment by subtracting the initial value of investment from the final value of investment. Then, divide the answer by the investment cost and multiply by 100%.  

It is essential to mention that when we talk about net benefits, we mean that are the positive results or outcomes of your fintech solution, such as increased revenue, reduced costs, or increased customer satisfaction, and total costs are the adverse outcomes or expenses of your fintech solution, such as development, maintenance, integration, or licensing fees.  

To understand ROI, you should ask yourself, what considerations should I consider to measure it?  

– Clarify costs  

As mentioned before, it is necessary to calculate how much you’ll need to spend on developing and marketing your app, as well as retention and customer service costs.   

– Set your KPIs  

KPIs, well known as key performance indicators, show how your mobile app is performing and how it can be used to know where to optimize your app. Every app is different, so you must look for the KPIs that best fit your app and your business needs. Remember that KPIs such as user acquisition or retention rate reflect users’ interaction with an ad or within your app.  

– Calculate LTV  

LTV stands for users’ lifetime value. It is a critical metric to understand how much money the company can spend on user acquisition while staying profitable.  

To calculate it, you need to multiply the average revenue per user by the customer lifetime value, or you can also calculate lifetime value using churn by dividing ARPU (average monthly recurring revenue per user) by user churn. The result will indicate how much a user is worth during the time they spend in your app.  

– Quality of information and analysis   

Make sure the data is 100% accurate. This will allow your company to manage the information for further decisions. It is crucial to partner with a mobile measurement platform to have a single source to track users’ behavior, segment users, and optimize your profit.  

What are the challenges in calculating fintech ROI? 

Calculating fintech ROI can sometimes be challenging because of the limitations you may find. We already talk about data quality, but you must consider that this data may need to be completed, consistent, or updated. Therefore, the data’s availability, attribution, causality, and reliability must be essential to measure the net benefits and total costs.  

Also, it is significant to consider that quantifying the monetary value of enhanced security and long-term customers is sometimes challenging because initial integration costs can be high. Realize that data privacy compliance and user adaptation impose extra costs, affecting your ROI.   

Finally, consider operational disruptions during implementation because they momentarily inflate costs and cyber insurance implications. They are hard to predict and may affect costs.  

Give thought to economic conditions. This also can make ROI calculation a multifaceted challenge.  

Now that we have explained the challenges you may find calculating fintech ROI let’s see how we can address them:  

– Define your goals and metrics: Being clear about your objectives will help you achieve them efficiently and effectively.   

– Define how you will obtain data: You can validate and integrate it by tracking and monitoring. When the data you receive is correct, it is easier to monitor and analyze it.  

– Don’t be afraid to experiment: Every time you need, test, and iterate your fintech solution, in this way, you will identify any issues or gaps, making your app constantly updated.  

How fintech companies can optimize their mobile applications to generate even more revenue  

To optimize your mobile app and increase your ROI, it is significant to implement the best practices and strategies, for example, defining objectives and metrics to match with customer needs, researching and analyzing the market demands to understand customer preferences and regulatory requirements, implementing and testing quality assurance processes to ensure accuracy, reliability, and safety, and lastly monitoring and evaluating performance and feedback for improvements.  

Let’s take a closer look at some points to consider to optimize your application:  

– Focus on speed: User-facing experiences greatly influence an app’s success. Regarding payments, bank transfers, account summaries, and others, users like to access fast and easily.  

– Focus on user experiences: Know your users to give them the best experience. Innovate and create accessible features to ensure your app is free of crashes, outdated features, and slow load times.  

– Give priority to significant feature releases: Try to spend only a little bit of time-solving minor improvements and making small initiatives. Instead, concentrate on improving automating processes like compliance and security checks; this will enable your fintech solution to be released to the app stores frequently, being one step ahead of the competition.  

– Make your application highly secure: The extra security steps can sometimes overwhelm some customers, creating a bad user experience. For that reason, it is vital to implement sophisticated biometric tech. Remember that the more your company invests in internal processes and user experience, the more revenue potential you will have.  

You can increase ROI through Artificial Intelligence; for example, you can use open-source projects for behavior analysis to identify potential cyberattacks or malicious activities to prevent measures.   

Also, with machine learning libraries, you can build fraud detection models to block or stop suspicious transactions before the fraud is completed. With open-source IDS/IPS (Intrusion Detection and Prevention Systems), you can identify malicious traffic patterns on the network to enhance the detection capability of new and unknown behaviors that may indicate advanced cyberattacks.  

Ready to take the leap? 

Consider partnering with ThinkUp, an experienced fintech app development company that understands the intricacies of fintech mobile apps. Let us help you transform your business and stay competitive in today’s fast-paced.  

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