Fintech Apps Need To Be Less Complex And More Comprehensive To Attract More Investments

A common pitfall for many fintech apps is that they are too complex to use for some inexperienced users. A complicated design, coupled with the natural nervousness of an unsophisticated investor, drives many new investors to traditional brokerages and firms in lieu of apps. This occurrence is a missed opportunity for both fintech apps and new investors, as traditional brokerages can cut into profits by way of fees and commissions. 

In this article, we will talk about why we should encourage financial literacy in society and how Fintech apps can be an important vehicle for achieving this. We’ll talk about how complicated Fintech designs can scare fledgling investors, and why Fintech app creators need to embrace simplicity as well as comprehensive services and tools if they want to gain a larger share of their market. 

The Benefits Of Financial Literacy

According to a Standard & Poor’s survey from four years ago, just 57% of adults in the United States were financially literate, ranking the country No. 14 globally overall.  Fortunately, much has changed in the past four years. Notably, increased access to the means to invest via fintech apps, as well as more opportunities for financial education, has helped make these numbers much lower.

Societies have a vested interest in encouraging a financially literate populace. When more individuals can invest money, more money is circulated in the economy, although it may have a negative effect on consumer spending. When citizens feel personally invested in the economy of their country, they feel more motivated to ensure that the domestic economy remains robust. 

Fintech played a crucial role during the coronavirus pandemic when fintech lenders proved to be a valuable tool for disbursing PPP funds to struggling small businesses, many of whom may have been ignored by larger financial institutions. 

Furthermore, increased access to investing can help traditionally disadvantaged groups build their fortunes. For example, someone who invested in the S&P 500 five years ago would enjoy a gain of 117.3%, with many individual stocks providing an even higher rate of return. 

One Comprehensive App For Fintech Uses

Most importantly, fintech apps should aim to offer comprehensive services. Many users are wary of having bank accounts connected to a variety of different apps out of concern for their cybersecurity. Many fintech apps embrace security methods such as fingerprint and face recognition passwords, but this can prove to be an obstacle for users in the event of a lost or damaged device. 

There is huge potential for easy-to-use fintech apps in the insurance sector, cryptocurrency, P2P lending, foreign exchange, and other alternative forms of investing. Fintech apps that can provide a comprehensive experience will have an advantage over competitors. 

Even the most innocuous-seeming apps can be used as vehicles for theft and cybercrime. For example, UN officials have been banned from the commonly used WhatsApp Messenger due to the ease with which cybercriminals can target highly influential people.

The Problem With Complicated Fintech Apps

As wonderful as fintech apps can be, sadly, many are too complicated and lack educational resources to be of use to the novice trader. New and young investors often feel uncertain and may be more likely to reach out for professional help with investing for the first time, but this can greatly cut into their profits.

It also undermines the spirit of true financial independence. This can only come through education. Paying a commission or fee for a financial institution to invest your money is not only expensive but will not provide users with the knowledge that can only come with a hands-on approach towards investing. 

Fintech apps must be easy for the end-user in terms of design and functionality. Fintech apps shouldn’t necessarily avoid using terms unique to the finance world, but creators of these apps should aim to provide educational resources as part of their services. 

Do Higher Levels Of Inexperienced Investors Lead To Market Volatility?

The rise of “meme stocks” as well as the highly publicized case of the college student who committed suicide because he misread his statement balance on his fintech app all point to a need for financial education commensurate with the rise of fntech uses. 

Indeed, it can be very dangerous for markets and individuals alike when new investors jump into complex trading such as day trading and trading on a margin without proper knowledge. 

“Pump and dump” social media influencers, for example, can take advantage of a financially illiterate audience to increase value in a stock by urging followers to buy, only to sell at the height of the hype. Elon Musk, a hero to many for a wide variety of reasons, proved his immense influence by drastically increasing the price of meme cryptocurrency Dogecoin simply by tweeting about it. Now, he finds himself “in the dogehouse” with the SEC who are, once again, investigating his tweets and how they affect the market. 

There are other negative effects that come from increased access to fintech apps. For example, trading in cryptocurrency such as bitcoin consumes a lot of energy. However, banning cryptocurrency in the past has also backfired because it is virtually impossible to enforce. 
Increased opportunities for people to invest and enhance financial literacy are positive developments for our economic future. However, fintech apps must take care to design their apps for ease of use and also offer educational resources for new users if they want to gain a competitive advantage.

Benzinga's Related Links:

• Are Quant Funds In Deep Water?
• Meet Qooore, The Fintech Merging The Experiences Of Robinhood And TikTok
• Fintech Focus For March 19, 2021

Photo Via Unsplash