Indian lenders have a fetishization problem. Graphic imagery, I admit. But it’s a diagnosis that fits with the unhealthy obsession banks and NBFCs seem to have with building shiny new digital lending apps.

For decades, they’ve operated with a quiet, unquestioned belief: if we build a beautiful app, consumers will wake up every day and discover, compare, and buy financial products like they are shopping for sneakers on Amazon.

The problem? None of us wake up thinking: “Today, I will download a financial services app and browse through 15 different types of loans.”

This is backed up by numbers. The math on digital lending apps is so ghastly that it should make lenders rethink their entire digital, distribution, product and business strategy.

The funnel is broken long before the loan screen

Indian BFSI apps have never had a top-of-funnel problem. India clocked ~1.7 billion finance-app downloads in 2024 — the highest in the world. But when you look inside the funnel, the romance collapses.

CleverTap just released two excellent reports on BFSI benchmarks. And the numbers tell the story of just how doomed most lending/banking storefronts are:

Only ~21% of new users complete sign-up in the first week. Meaning: ~79% of all installs never even become registered users.

A stricter benchmark shows ~14% fully complete onboarding — eKYC, details, everything.
Even when the intent exists, 38–63% of customers abandon onboarding if the flow is long or asks for too much information.

And this is not specific to one institution or segment — this is the industry baseline.

Hence, it’s mostly futile and perhaps net-negative if you’re underpinning your loan book growth strategy around driving downloads on your own digital lending app. For most, that race is lost before it even starts.

But the story gets even stranger.

Once users do sign up, they transact at astonishing rates

Here’s the twist that most lenders miss:

App sign-ups convert at exceptionally high rates — but only once they’re already your customer.

The BFSI benchmark report shows:

• 95% of newly onboarded users make at least one financial transaction in the first month.
• 76% complete their first core transaction within a week.
• Most need only 2–5 sessions before that first transaction.

In other words:

Downloads? Mostly junk and vanity statistic.
Onboarded users? Absolute gold.

This is the paradox of finance apps: they fail spectacularly as acquisition engines but excel brilliantly as engagement + monetization engines.

Once someone has crossed the KYC wall, funded an account, or completed their first transaction, they behave with predictable, high-frequency intent:

• Users open BFSI apps ~11 times per month on average
• Push notifications see ~7–9% CTR, among the highest of any industry
• In-app messages get ~24% CTR
• Emails get 30–34% open rates, ~2.5–3% CTR
• This is a dream owned-media channel. But it’s a terrible storefront.

Why apps don’t sell loans — and probably never will

The finance category violates every rule of app-led discovery:

1. Loans are not pull products

People don’t browse for credit because they’re bored. Loans, for the most part, tend to be driven by immediate financial need, distress, or emergencies. Yes, a few smart ones do try financial acrobatics by borrowing cheap and investing in other assets but mostly, loans are triggered by real world circumstances not an app notification.

That’s why contextual surfaces outperform apps:

Checkout pages on e-commerce and travel apps
Edtech or healthcare journeys
Telco ecosystems
SME bookkeeping apps
Salary and payroll software

Your borrower’s intent does not originate in your app. It originates where their need appears. This is also the core thesis behind FinBox’s pioneering work in building embedded finance platforms but let’s stay on this subject for a bit more.

2. Loans aren’t dopamine taps

The problem is that lenders often treat their digital apps as just-another-e-commerce-platform. The thesis is that if the users download and if they get enough notifications and offers, they will transact and avail financial products. But getting a loan is way more serious than impulse buying a desk lamp.

Most online shopping runs on these dopamine hits which are delivered through visual appeal of the product, the ease of purchase and the tangible object that arrives at your door in a day or two.

Credit is the polar opposite. The money is invisible. There are forms, T&Cs, and documentation to get through. Moreover, there’s a multi-year repayment obligation which brings future anxiety.

No amount of shiny storefronts or marketing can upend the physics of the category.

3. The numbers show a structural shift toward embedded finance

India’s embedded-finance revenue is forecast to grow from ~$6B today to $28–34B by 2029, at roughly 38% CAGR — driven overwhelmingly by credit embedded into high-intent journeys. What this means is that borrowers are likely to consume more credit from storefronts or digital destinations where they’re already transacting. The offers have to be tailored, contextual and delivered at the point of purchase. Not through a boring lender app which sits and gathers dust in most phones.

For context:

• Lending-app downloads in India fell 13.4% YoY in 2024, to ~274 million
• Global lending-app downloads fell ~7.7% even as payments surged

Consumers aren’t rejecting digital credit. They’re rejecting the idea that they must download a bank app to access it.

The YONO Mirage: A dangerous exception to copy

Every defence of “let’s build a digital app” inevitably cites SBI’s YONO:

• 74 million registered users
• ₹3.2 lakh crore+ in loans disbursed
• 10M+ daily logins
• ~65% of SBI’s savings-account transactions handled inside YONO

These numbers are extraordinary. They’re also non-replicable for 97% of lenders.

YONO works because:

SBI already touches one in every three Indians
It folded an entire marketplace (shopping, travel, bill pay) into a single platform
It rebuilt processes — not just the UI — for digital

If SBI built YONO today from scratch with no customer base, it wouldn’t look like YONO.

If a mid-sized bank tries to imitate it, they’ll burn hundreds of crores chasing the wrong hero story.

So why do lenders still build apps? Three real reasons.

Let’s be fair: lenders aren’t stupid. They invest in apps because:

1. Apps drastically cut cost-to-serve

Digitising branch-level servicing can reduce servicing cost by 40–60% in some models.

2. Apps are unmatched engagement engines

High open rates, high repeat sessions, and low marginal cost of communication make apps ideal for:

Top-ups
Renewals
Repayments
Cross-sell to existing customers
Risk monitoring
Lifecycle engagement

3. Apps signal digital leadership

Boards, analysts, and regulators expect visible progress in digital infrastructure. The apps serve important purposes in customer engagement, lifecycle selling, and overall industry leadership. But expecting them to sell loans is a bit much.

The 2026 playbook for lenders

1. Reframe the role of the app in your strategy deck

Stop positioning the app as: “Our digital storefront.”

Start positioning it as: “Our engagement + servicing engine for existing customers.”

Clarity about what the app does and what it doesn’t is the first step in fixing bad PR and misaligned expectations – both internally and externally.

2. Move loan origination budgets to partnership lending

Invest in embedded finance — not in “bring users to my app.” The bank of the future is not going to be a bank at all. It’s important that lenders understand this and stop thinking of app downloads as their customer acquisition benchmark.

Instead, a better move would be to reach customers where they’re already transacting or spending much of their time volunatarily!

Your best acquisition surfaces are:

• E-commerce platforms
• Mobility apps
• Telcos
• Payroll & HRMS
• Edtech, healthtech, travel, logistics
• SME invoicing, accounting, and capital marketplaces

3. Fix the onboarding funnel as if your revenue depends on it (because it does)

Benchmark yourself ruthlessly:

• ≥20% install → sign-up
• ≤2 minutes for basic onboarding
• 2–5 sessions to first transaction
• 7-day window for the first conversion

Everything else is leakage. Customer acquisition costs are already off the roof and set to get higher as the space gets even more crowded; lenders would do well to have clear metrics for onboarding and conversion rates that make sense for the business – not just for marketing and PR.

4. Build an “owned media engine”, not a “digital showroom”

Start leveraging apps, notifications, digital channels such as WhatsApp to build an integrated customer engagement and servicing platform. This should give you:

• Immediate reach
• 6–24% CTR
• Nearly-free remarketing
• High trust
• Repeat revenue

Why pay Meta/Google again to reach users you already have?

The bottom line

Indian lenders don’t have an app problem. They have a misunderstanding of what apps are good for.

Apps are not:

Where loan intent originates
Where discovery happens
Where a customer evaluates financial products
A substitute for embedded distribution
A primary acquisition channel

Your borrowers don’t want another storefront. They want credit exactly where their need emerges — and they want your app only after they become your customer.

The future of lending is embedded first, app-enabled later. Not the other way around.

PS: I also wrote a piece analysing why banking apps tend to be so bad and buggy. You can read that here.