Indians prefer payment, lending apps over banking tech; 87% of FinTech reviews are 1-star or 5-star: RBI article

Payment and lending applications in India are more likely to be installed and reviewed by users compared to banking technology apps, according to a study published in the RBI's latest Bulletin.

The study, published in the RBI’s September bulletin under the title “The Untold Story of FinTech – Customers’ Experience”, examined 5.69 million user reviews of FinTech applications using advanced machine learning techniques.

It found that apps offering payment and lending services recorded a higher probability of installation than those in the banking technology segment.

“The likelihood of receiving a review per unique FinTech app installation is 0.54%, marginally higher for payment and lending apps (0.6%) compared to banking technology apps,” the article said.

India is the world’s third-largest and fastest-growing FinTech market with over 10,000 startups and 26.4 billion app downloads in 2023.

Finance-related apps accounted for 481 million downloads in the last quarter of 2023 alone, led by digital wallets and payment apps (100 million), personal loan apps (93 million) and investment apps (64 million), the article said, citing industry data.

The analysis also revealed that FinTech reviews in India are highly polarised, with about 20% of reviews being one-star and 67% five-star.

“Thus, these extreme reviews account for almost 87 per cent of total reviews in the FinTech ecosystem," said the article authored by Ashish Khobragade, Sakshi Awasthy and Rakhe Balachandran, the Department of Economic and Policy Research (DEPR), Reserve Bank of India (RBI), and research intern in DEPR, Mantisha.

In terms of sentiment analysis, it said the numbers may vary.

Notably, the article said 61.7% of all FinTech apps studied received a share of positive reviews in the 50% to 80% range.

A smaller share of apps (7%) received less than 20% positive reviews.

"Thus, the distribution of mean positive reviews is slightly negatively skewed in the Indian FinTech ecosystem," it added.

Among the FinTech apps that were below the overall positive average, 58 per cent belong to the payments sector, 22 per cent belong to alternative lending, and 20 per cent belong to the banking tech sector.

The authors said over 5.69 million reviews, spanning April 2022 to August 2024, were collected, along with app-specific data like unique installations, review counts and major app updates. The open-access Python package google-playscraper was used to extract app reviews.

The article said negative reviews can function as an effective feedback mechanism from customers to FinTechs, and can also provide macro-level insights to policymakers.

The article said major customer concerns across segments relate to customer support and service, app functionality and technical issues, and loan-related issues in application and approval, credit limit and credit score.

"A major concern identified across sectors is customer support and service (CSS), which emerges as the most significant concern for banking technology customers, and the second-largest for payment tech and alternative lending tech users," according to the article.

The central bank said the views expressed in the Bulletin article are those of the authors and do not represent the views of the Reserve Bank of India.