In today’s financial landscape, numerous technology-driven institutions offer savings accounts with returns on deposited money. Understanding how these digital accounts function and their features is crucial to maximizing benefits while minimizing risks.
Understanding the Returns
The most appealing aspect of these savings accounts is the returns, often exceeding those offered by Cetes investments (considered the safest in the market). These high returns aim to attract more customers.
Joel Cortés, the General Director of Kardmatch, a financial product comparison platform, explains that these high returns are possible because fintechs also lend money, earn interest, and have lower operational costs due to the lack of physical infrastructure.
A few years ago, annual returns could reach 15% or more. However, with the downward trend in the reference interest rate, current returns range between 6% and 12% annually for most fintechs offering immediate liquidity.
Besides the returns, digital savings accounts allow for digital and physical card payments (in select fintech companies) and combine returns with cashback of 1-3% and interest-free installment purchases.
Is the Investment Safe?
Investing inherently involves a certain level of risk, and digital savings accounts in fintech are no exception.
Many fintechs entering the market with these products operate as Sociedades Financieras Populares (Sofipos), requiring minimal capital and not having coverage from the Instituto para la Protección al Ahorro Bancario (IPAB). Instead, Prosofipo covers insolvency, with a limit of 25,000 Unidades de Inversión (UDIs), equivalent to approximately 211,391 pesos per customer.
“The risk with these institutions is that they may become insolvent and be unable to return your money or guarantee your liquidity,” explains Cortés, the General Director of Kardmatch. However, he clarifies that the risk of this happening with leading fintechs in the market is low.
Another characteristic of digital savings accounts in tech companies is that many have monthly deposit limits, such as Nu’s products with limits ranging from 23,000 to 230,000 pesos per month.
“Some technological fintechs are beginning to obtain banking licenses, so we anticipate they will offer a broader range of products with increased customer confidence in the near future,” Cortés anticipates.
Securing Your Digital Savings Account
To minimize the risk of such an investment, it’s essential to consider certain measures.
Firstly, experts recommend checking the Comisión Nacional Bancaria y de Valores (CNBV) directory to determine under which entity the fintech operates. Additionally, review user experiences and feedback from other customers.
If you already have a savings account with a fintech, ensure your deposits are always below the Sofipo insolvency coverage limit and familiarize yourself with claim protocols should you need them.
Key Questions and Answers
- What drives the returns on digital savings accounts? High returns are offered by fintechs to attract more customers. These companies lend money, earn interest, and have lower operational costs due to their lack of physical infrastructure.
- How safe are these digital savings accounts? Fintechs operating as Sociedades Financieras Populares (Sofipos) have limited coverage, with Prosofipo covering up to 25,000 Unidades de Inversión (UDIs) per customer. The risk of insolvency is low for leading fintechs, but it’s essential to be aware of deposit limits and claim protocols.
- How can I secure my digital savings account? Verify the fintech’s operation under the CNBV directory, review user experiences, and ensure your deposits stay below Sofipo’s insolvency coverage limit. Familiarize yourself with claim protocols for added security.
