Digital banks go by professionals and monotributistas: they give free accounts, premium cards and discounts of 30%
A new email notification arrives on the cell phone. The message has the bank as the sender and includes two attached PDFs: one, with the summary of the month; another, with a communication about the increase in commissions.
"They went through the clouds," cried many Argentines who received that email with bad news. And it is not for less, since bank expenses will increase up to 40% from December 31.
In the case of the leading entities, the figures are as follows on average:
- Current account: $ 750 per month
- Package (accounts, card and checkbook): between $ 1,000 and $ 2,000 per month
- International card renewal: $ 3,500
- VIP card renewal: $ 12,000
- Card maintenance: from $ 250
The picture is even more disturbing for monotributistas: not only will they be affected by these increases (since the payment of these packages for their daily operations comes out of their pocket), but since January their monthly obligations with the AFIP will increase the whopping 51%, for updating the scales.
Thus, "dissatisfied" monotributistas and employees must allocate a greater portion of their budgets to banking services, something that Argentines have been doing since the beginning of the year according to Central Bank figures revealed to iProUP:
- Credit cards: of the 26 million holders that were in December, it went to less than 23 million (-13%)
- Fixed terms: reduced from 4 million to almost 3 million, down 25%
- Current accounts: virtually unchanged, with 6.4 million
Thus, with the focus on monotributistas, professionals and employees in a dependency relationship that do not have cards or other services bonus, the digital banks launched their "operational seduction": they see the "increase" of traditional banking as another great opportunity to grow in number of users, trying to convince the dissatisfied to start operating by mobile banking.
In Argentina there are three digital banks that offer their services for free and are presented as the alternative to all those who need a package of services - similar to that offered by traditional entities - but who want to reduce some items of their budgets.
- Wilobank, commanded by businessman Eduardo Eurnekian and former BAPRO president Guillermo Francos
- Brubank, created by former Citi number one in Argentina, Juan Bruchou
- Rebanking, of the Rosario holding group Grupo Transatlántica
This trio differs from fintech because they are regulated by the Central Bank and then must comply with all the obligations and regulations that apply to the rest of the entities. In fact, their savings banks have a uniform bank code (CBU) instead of the uniform virtual key (CVU) such as digital financial ones.
At the same time, they differ from traditional banking because they do not have branches or Homebanking: all operations can be performed from an app and the resolution of claims, by cell phone or chat. The user registration is also by phone and in less than 10 minutes: just upload the photo of the ID and a selfie.
Although they were born to promote financial inclusion, many of the users that have already been banked are betting on these applications to save costs or simply gain agility in the use of products.
"Analyzing the scoring of users, we can say that 70% are banked," Stefano Angeli, CEO of Rebanking, tells iProUP. Meanwhile, from the bank founded by Eurnekian ensure that half of its customers have accounts in traditional entities.
Wilobank has the largest concentration of customers: 80,000, of which half also processed a credit card. Rebanking has about 25,000 accounts (3,100 credit cards granted). For its part, Brubank accounts for just 10,000 savings banks.
Given the increase in expenses in traditional entities, analysts expect that a significant number of employees, professionals and monotributistas who want to cut costs bet on these solutions.
"In a context of crisis, if there are alternatives that provide them, or even better services, without charging commissions, it is clear that there will be a migration to fintechs and digital banks," economist Ariel Setton tells iProUP.
"The zero maintenance cost is very attractive and many users sign up because they know they will have a basic banking service, savings bank in pesos and dollars, free credit and debit cards," says Guillermo Francos of Wilobank.
Ignacio E. Carballo, director of the Program in Fintech & Digital Banking of the UCA, adds that these entities have "particular characteristics that make them very competitive, such as remunerating the savings account, quoting consumption and offering the cheapest dollar in the market."
Both Wilobank and Rebanking add an extra attraction: they pay the balances on customers' accounts. The profitability is 20% and 25% annually respectively, even if that money remains "idle" for a single day. Brubank, on the other hand, did not activate this possibility.
These entities also offer fixed terms with rates that exceed 50%, above almost all the banks of the City and in tune with the Nation (52%). The company that directs Francos already has 5,000 placements for $ 200 million, while the Angeli company goes for 2,000.
Being free is not the only advantage they propose. "They also offer 24x7 operability, online service and a much more enjoyable user interface," Setton recalls.
"A big differential is to avoid going to the branch and using an online communication channel to solve procedures by mail, chat or telephone," said Angeli, who believes that salary accounts are not yet an interesting business for these entities.
At this point, the CEO of Rebanking notes: "We do not have a comprehensive solution proposal for a whole staff, since employees require a more complete suite of services."
"In these accounts, traditional banks 'hunt in the zoo', as they have a greater ability to segment their packages by income. At higher wages, better proposals: higher discounts, 0-rate loans, sum of miles or preferential access to airports, "Setton lists.
But online also prepare their battery of benefits.
- Rebanking already offers promotions with your American Express card. Its basic version has no costs and the user can pay per month to have higher memberships, such as Gold, Platinum and Black. Thus, it is possible to access 25% discount and three installments without interest in Mercado Libre and Mercado Pago. It also promotes discounts of 50% in Rappi, 30% in supermarkets, 20% in clothing and 9 installments without interest in Transatlantic Travel tickets
- For its part, Wilobank provides a credit Mastercard to access the promotions of "the two contactless weeks per month that launches this brand of cards: up to 30% discount at YPF, supermarkets and restaurants. And advances in its plans to offer more banking services - such as insurance - from third parties, based on an Application Programming Interface (API) to connect with associated financial entities.
In the case of monotributistas and independent professionals, the most complete alternative is that of Wilobank, which offers savings banks in pesos and dollars; Mastercard credit, debit and prepaid cards; fixed terms and paid account.
Employees - or monotributistas - who already have an account in another entity and a plastic to withdraw funds, can opt for Rebanking, since at the moment it does not provide a debit card although it advances in an agreement with Mastercard that will seal in the short term .
Thus, the user can expand their product offer with an American Express at no cost. In addition, it is the bank with the lowest dollar price in place. Brubank, meanwhile, has been playing very far behind: he doesn't have a credit card nor does he pay balances.
But they are not the only ones who are looking at the Argentine middle class who are looking for an alternative to traditional banking. Mercado Pago grants a Mastercard card with chip (the contactless version is approved) next to Patagonia, with interest-free installments in Mercado Libre and purchases with QR.
As part of this strategy, Patagonia also provides a free savings account and Visa Debit card to operate, completing a proposal similar to that of a digital bank.
Paradoxically, economic turbulence prepared a firm ground for the expansion of virtual banks. "Something that we can rescue from the crisis is a greater impulse of the consumers towards these new players of digital nature", advances Carballo.
The Argentines sharpen the pencil and look for new ways to cushion bank expenses in the new financial platforms. And avoid shocks every three months, the frequency with which those bank mails arrive with bad news.