What are the benefits of offering digital accounts to your customers?

Undoubtedly, digital accounts are already a fundamental part of the day-to-day financial tools for people around the world. According to a study by Red Link conducted in Argentina, in May of this year, digital account users increased from 7 million to 9.9 million. Yes, in just one month! This clearly shows that this phenomenon is here to stay.

The boom of digital accounts has been consolidated by the changes in consumer habits brought by the Covid-19 pandemic. According to a Global Findex study, in 2021 76% of adults worldwide had a bank or digital account. This marks an 8% increase compared to the 68% recorded in 2017. And to the 51% recorded in 2011. And, undoubtedly, the benefits of digital accounts transcend these circumstances. That is why they constitute a business model highly considered by the business sector.

More and more organizations, entrepreneurs, and investors are choosing them as a scalable and promising business to develop. Even companies from different sectors like agriculture, retail, cryptocurrency exchanges, and deliveries are adopting them as a new unit beyond their core business.

Discover in this article all the economic and positioning benefits that offering digital accounts can generate for your company. Here we go!

Let's get straight to the point: what are the main benefits of offering digital accounts?

We can group the benefits of offering digital accounts to your customers into three categories:

1. Strategy and finance: accounts are the first step to offering more products to your customers. For example: cards, insurance, loans, and investments that will be based on the balance deposited in each account. One of the most important benefits is connecting them with credit or prepaid cards since they generate earnings through commissions, interest, or the interchange fee (the latter is a constant income, every transaction generates it!). And the best part is that the connection can be easily made thanks to APIs.
2. Consumer perception: the positioning of your brand is an intangible and highly valuable gain. If in addition to your own business you enable financial services, consumer appreciation for your brand will increase significantly and generate prestige. It will also generate loyalty, as your customers will find more than one solution within your company and will not need to look elsewhere in the market.
3. Data: When you have embedded finance within your business, you will have access to the transactional behavior of your customers, which you would not have if the account were with another entity. This data is monetizable from many perspectives, for example, to:

• Improve your users' experience based on their behavior,
• evaluate them when granting credits,
• perform identity validations,
• sell anonymized information

All that information you didn't have before can be very valuable!

Why are digital accounts a business that keeps growing?

Users choose them!

Small savers or investors are very excited to have digital accounts to make their monthly salary work for them. Since they are free, it is very easy for them to create an account with the different offerings that appear on the market and address their various needs:

• Crypto wallets;
• accounts to store their savings;
• accounts to make investments;
• Account suitable for paying services

The socio-economic context positions them

In the face of the significant devaluations or inflation characteristic of Latam, people find in this new product a possibility to invest their money without needing to lock it in fixed-term deposits as traditional banking offers.

And, in this case, what is the business for companies? Simple: having balances deposited in the accounts will generate returns for your business as well. In addition to all the associated products we already mentioned above!

For example, in Argentina, different digital accounts offer at least a 60% nominal annual rate (NAR). Yes, bank fixed-term deposits can reach up to 75%... but people cannot access their money until the term ends and their funds are released. Therefore, being able to access the balance at any time is a great advantage for digital accounts!

Something similar happens in Colombia, as the balance of savings accounts shows an annual increase of about 12% according to the Bank of the Republic. This is due to the fact that different tools emerge to fight inflationary processes, so savers prefer to have their money available to make decisions rather than locked in fixed-term deposits.

Companies use them to provide benefits and get to know their employees.

That's right, after the pandemic and the establishment of remote work as the new normal, companies started to look for the best way to reward their employees. This is where virtual accounts -and cards- play a fundamental role in bringing employee benefits, corporate accounts, monetary compensations, and gift cards to the virtual world.

But that's not all; this technology comes with tools like Big Data, which allows for a better understanding of each employee's preferences. This way, benefits can be continuously segmented and improved, providing the best experience and satisfaction to all members of an organization.

Unity is strength: in Argentina, digital accounts are as reliable as banks against fraud

The Association of Banks of Argentina (ABA, foreign private), Abappra (public and provincial banks), the Specialized Banking Association (ABE), Adeba (national private), and the Argentine Fintech Chamber (Fintech Chamber), agreed on an action plan and protocols for suspicious or fraud cases.

This is an innovative agreement that sets a precedent for dialogue between traditional banks and fintechs. It will facilitate user protection and provide a secure experience for those who operate through digital channels, safeguarding their assets and personal information.

Mariano Biocca, executive director of the Fintech Chamber, emphasized that the agreement "will allow procedures and processes to be standardized to act as quickly as possible to combat fraud."

What should you consider to launch your own?

First, it's important to understand if it is a latent need for your business and your clients. Launching accounts requires effort and will generate value as long as they are used. Therefore, understanding what the user base will be and how it can generate traction is key to launching any new solution, service, or product.

Then comes the time to clearly understand what type of functionalities and services should be included to ensure usability. The value proposition of the accounts must be built around the user's needs. This is where it is recommended to have a technological partner who is a specialist in financial services infrastructure and can help you scale your business based on your target audience.

We hope this article has been useful in gaining a deeper understanding of the promising path of digital accounts and how they can become a profitable business for many companies!