How to Validate Your Fintech App Idea

The fintech app market is on the rise and is only expected to grow bigger and more prominent in the nearest future. According to the Fintech Technology Market Outlook, the global fintech technologies market size was valued at $110.57 billion in 2020 and is projected to reach $698.48 billion by 2030, growing at a CAGR of 20.3% from 2021 to 2030. These are significant and impressive numbers that are sure to motivate an unmeasurable number of businesses, entrepreneurs, and developers to create a fintech app.

Fintech apps became increasingly popular since the COVID-19 pandemic broke down, as banks had to quickly learn to deliver their services in a safe way. The rapid growth in innovative technology resulted in technologies such as cloud banking, application programming interface (API), artificial intelligence (AI), blockchain, and data analytics being used in fintech apps. This made the apps more convenient and allowed banks and other financial institutions to predict user behavior, make contactless payments, maintain transparency, and add value to the customer. On top of that, fintech isn’t an over-saturated market. Being rather new, it has its issues, concerns, and plenty of problems to be solved. The most prominent ones include concerns around privacy, security, and often conflicting regulations across different jurisdictions.

So if you have a fintech app idea, you’re probably in the right niche. But now you need to make sure your idea is a good one. And this is what this article is about. The question we’ll answer is the following: how to validate an app idea and make sure it will be profitable?

Why do you need to validate your app idea?

You might be someone with plenty of experience in the world of fintech and be sure your idea is worth pursuing. Yet, you have to keep in mind that web development is costly. You need to make sure that your idea isn’t just a good one, but also profitable.

Before moving on to app validation ( a step-by-step guide), let’s start with step zero. What if you don’t have an app idea but want to get into the niche? Where do you start?

Step 0: Find a problem that you want to solve (better than others)

If you study the fintech market closely, you’ll find problems that can be solved or can be solved better. This is where your app idea should come from ― based on an existing problem that you can solve.

Finding a problem that you can solve is based on market research and competitor research. Thorough research will disclose the niches that your app can fill. You’ll know what the customers struggle with (by reading reviews, blogs, and forums), you’ll know what competitors lack (by comparing multiple competitors), and this will tell you what your app should focus on. The questions to ask yourself here are:

  • Which problem does your app solve?
  • Is this problem important?
  • Do other apps solve this problem?
  • Does your app solve this problem in a new way?

Step 1: Find your target audience

You have an idea for your app ― great! Now it’s time to validate it. And the first step is finding your target audience. Your idea might be creative and clever, but who will benefit from it? Who needs it in their lives? This is the time to create your Customer Persona ― your ideal customer.

The Customer Persona should have demographic characteristics, psychographic characteristics, socioeconomic status, geographical location, interests, values, and priorities. Your fintech app can’t be for everyone, even though everyone uses money. It can be for young people that love to travel (e.g., Revolut), for people who don’t trust banks and value the feeling of control (e.g., NuBank), for consumers “who earn less than $100,000” and face financial challenges, like MoneyLion.

Once you have your ideal customer, it’s time to find your target audience. Are they the ones you think they are? To do that, use analyze the audience of your competitors: use SEO tools, social media analytics tools, and content tools to know who is interested in your competitor’s apps. Chances are, you’ll review your Customer Persona multiple times before you land on your actual target audience.

Step 2: Conduct market research

You’ve obviously carried out market research while looking for the idea for your app. Now, it’s step two of market research, and it’s a different one. When you already know what you’ll be developing, the process looks very different!

  • Come up with phrases and keywords that describe your fintech app idea best. Once you have a list, use search engines to see how popular those keywords are. Use Google Trends to compare different descriptions and see what resonates best. Maybe it’s not your idea exactly, but something similar? Look at the questions suggested by Google when you search for the relevant keywords. Do people ask questions? What are they? Does your idea carry the answer?
  • Look through the app stores (AppStore and Google Play) to find all your competitors. Point out the ones who are on top of the lists. Look at the comments, ratings, and reviews to know what they are good at and what they lack according to their users. Then test your competitors’ apps, create a list of their advantages and disadvantages, and see how your app fits in. Which problems of other apps does it solve, what it might lack, and how will it get to the top of the stores.
  • Research the technologies behind your competitors’ apps, but also research the technologies that are more popular now than what they were when your competitors’ financial solutions were released. Could your app be better simply because it’s written in a different programming language or uses a different server?
  • Look up the fintech market size, its trends, its geography, and what’s being funded. Go through VCs, accelerators, and other startup innovators and see if they’ve funded any fintech apps recently and if so, what kind of apps were they. Often, you’ll find blogs and articles explaining why some solutions are being funded while others are being ignored. Is your app idea something that’s likely to get funding, according to this information?

By the end of your market research, you should have a unique selling proposition (USP). A unique selling proposition is the one thing that makes your business better than the competition. It is how your product differentiates from others in the market.

Step 3: Sketch a customer journey map

If it looks like your validation process is going smooth so far ― you have a goal, an idea of who your customers are, and a unique value proposition that you’ve derived during the market research phase, it’s time to think of how the customer will interact with your app in order to achieve their goal. A customer journey map is a simple way to understand the future experience of your customer through visual representation. This information will give you an idea of how you will sell your app.

To create a customer journey map, you’ll need to think of what the customer’s journey will be like before purchasing your app. This will ensure you can profit from your fintech app ― not just enjoy your great idea. You’ll need to look at the ways your customers will first hear about your app. These could be:

  • Social channels
  • Paid ads
  • Email marketing
  • Third-party review sites or mentions

You’ll need to sketch based on your research what is it your customer will do next. Suppose, they went to the app store and installed the app. Now they are on their trial period or they are using the free version of the app. What’s needed from your app for them to move further? This will identify the app features that are most critical to develop during the first stages of app development.

Step 4: Test your idea

Now that you have a vision of your app, your target audience, your USP, and the customer journey in mind, it’s time to test whether all of this will actually work. I know, this sounds almost unrealistic. In the end, you need to have a product to see if someone will pay for it, right? Sure, but there are still a number of ways you can test your idea before going on and hiring a team of high-paid programmers.

  1. Ask people for feedback.

Don’t be scared to simply ask. Choose a relevant user group ― the one from your target audience, and ask them what they think about your idea. You can use social media, forums, and websites like Reddit for that. You can also use more traditional methods like interviews and focus groups.

  1. Build a minimum viable product just for testing.

Create prototypes or build MVP ― a stripped-down version of the app that tests how its basic functionality works and let it out in the world to see if people will use it.

  1. Generate market interest: create ads, social media posts, and introduction videos, and see whether people react to that at all.
  2. Partner with another business (or your different business) and post that this kind of fintech app will be released soon. See if there’s any interest.
  3. Post your app idea on Product Hunt. Product Hunt helps you get lots of feedback on the app idea.
  4. Attend meetups and hackathons to promote your MVP or app idea. Take notes on what you’re told about the app.

Finally, if you have the resources, the information, and the confidence, you can create beta and demo versions of your fintech app. This is the final stage of your app idea validation process ― you’ve researched and tested and talked and listened. Beta and demo versions require significant resources and spending. They are a serious risk, so make sure you’ve tried everything else before you’ve started with that. Yet, obviously, this is a necessary step in app development. After you’ve created a demo or a beta, gather feedback and go on developing a full version of the app having this feedback in mind.

During your web development process, your app idea will be tested and corrected multiple times. It’s important to stay flexible and open-minded. Sometimes, your idea will change, but the app in the end will be all better because of it.

At Elinext, we help develop fintech apps according to all your requirements. Look at our case study to see how it usually works.

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