Key Performance Indicators/Metrics in Fintech (KPIs)
The financial technology sector continues to grow with new trends. And it is your responsibility as a fintech business to cater the standard of each. There aren’t sufficient examples/role models to learn from because fintech businesses are still relatively new. Therefore, keeping a close eye on each metric’s data is crucial.
Fintech companies have a great deal with fiscal flexibility. It’s possible to take more risks when dealing with fintech and test out new financial models. However, a larger degree of responsibility is required in exchange for this autonomy. Be carefull when making any kind of financial decision. Even a single misstep and your entire financial enterprise could fail.
We have compiled this guide to help you understand financial metrics relevant to the financial technology industry.
1. Action Stats
You must know what your customers do in your app. With that information, you can figure out if their actions caused the crashes or errors that kept them from doing something important, like logging in or finishing a deal. If not, then something about the user interface stopped them. Maybe a button wasn’t in the right place, or the information about a process wasn’t clear, or they were missing a key piece of required information.
The actions and steps your customers take through your app or website generate data that tells the story of how they move through and finish the custom process you make for them.
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This is the most important aspect you need to keep track of. What is a financial business, after all, without customers? You need to keep track of how many leads you are getting every day. And most importantly, you need to keep track of how many of those are turning into paying customers.
Leads can be assured in a number of ways, by using internet ads, marketing through social media, or even word-of-mouth. It doesn’t matter much how you come up with them. The important thing is that you have a steady flow of leads.
And the best way to get leads is to use methods from “inbound marketing.” There are many ways to get people to come to you instead of you having to go out and find them.
3. Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is another important metric you need to keep an eye on. It is how much you spend on marketing and sales for getting each new customer. But it can also be the cost of getting a new customer through other means, like referrals.
The CAC can be very high for Fintech businesses. Because some FinTech companies tend to have a lot of high-value customers. But some financial businesses have a very low CAC. This is because they have a lot of low-value customers.
The important thing is to keep track of your CAC so you can figure out how much it costs to get new customers. And so that you can compare it to the value of a customer over his or her lifetime. There are many things that can change your CAC.
One way to lower your CAC is to use better marketing platforms. Improving your sales process is another way to cut down on the cost of getting a new customer. If you can get more of your leads to turn into customers, you will have to spend less money to get new ones. Referral schemes are also an excellent approach. This is because they sell through word of mouth. When your clients are happy, they are more likely to tell their friends and family about your fintech business.
Whether your financial business is brand new or has been around for years. One thing is certain, which is that they are important.
Your financial business will succeed or fail based on how well/bad it converts. After all, what’s the point of getting leads if they don’t turn into paying customers?
There are many things that can change conversion rates. As a financial business owner, you need to know about all of them. You also need to keep a close eye on it so you can find any of these KPIs early and take steps to fix them.
There are a number of things that can affect how well your fintech converts.
- Quality of a product or service
- User Experience.
- Helping out customers
5. Customer Lifetime Value (CLV)
CLV is a metric that shows how much money a customer will bring in over the course of his or her lifetime. This is a key measure to keep an eye on because it can help you figure out how much you can spend to get new customers.
There are many things that may influence your CLV.
- Average Revenue per User (ARPU)
- Turnover Rate (percentage of customers who stop using your fintech product)
- Rate of Referrals (percentage of customers who refer your fintech business to others)
- Upselling and Cross-Selling Rate (percentage of customers who buy additional products or services from you)
One of the most important financial metrics for fintech is revenue, because it shows how good your business is. There are many ways to track the growth of your company’s revenue. You can compare two or more financial ratios by using revenue measures. By doing this, you’ll be able to get a better idea of how well your business is doing.
The debt-to-revenue ratio, the gross margin, and the working margin are just a few of them.
7. Cash Flow
Keeping an eye on the cash flow of your business is important because it can help you avoid financial issues. You can improve your cash flow in a number of ways.
One way to improve your cash flow is to give early-paying customers a deal. This will make them more likely to pay their bills faster, which will give your business more cash.
Setting up your prices is another way to improve your cash flow. Even though it might not make sense, if you raise your prices, you’ll actually sell less of your goods. But each sale will bring in more money, which will help your cash flow overall.
8. Technical Metrics
Each product will have a different set of features, and its technical needs will be very different based on its tech stack and app capabilities. Still, from the customer’s point of view, the front end will look the same at the end of the day: if something doesn’t show up on the screen when requested, we have a problem.
Nothing is more important to UX than making sure that bugs, crashes, and anything else that could affect the app or website’s general performance should be meticulously tracked and looked into to make sure they never happen again.
- Crashes (or errors) per Session
- Non-Fatal Crashes
- Crash Incidence by App Version and Platform
If you keep an eye on these key performance indicators (KPIs), you’ll know how well your app works technically, how involved your users are, and how much money they bring to your business.
Once your key performance indicators (KPIs) are set, look at how you can improve them with tools for audience activation and user engagement to improve your app user acquisition plan. If you use all 8 key metrics, you will be on your way to making the best-performing financial app.