To understand the future of digital transformation, it’s important to look back on its history.
Payments have evolved significantly. In the past, people traded cash and coins, using dollars and cents, but now we trade value digitally. The shift to digital payments and the decrease in cash usage has been gradual, but the decline of cash accelerated during the global COVID-19 pandemic. Let’s explore how digital value has transformed over the last few years.
Digital value refers to any form of currency, electronic asset, or means of exchange that is handled, kept, or traded on digital computer systems.
Examples of digital value include cryptocurrencies, central bank digital currencies, and various virtual currencies like gift cards and loyalty points. These gift cards and currencies are linked to many well-known brands, appealing to consumers’ interests and preferences.
These assets can be logged in a private or public online database or a distributed ledger. A business, organization, individual, or bank can own them. Digital value exists outside the fiat currency system and is not held in a bank account with a financial institution.
Analog Payments vs Digital Value
The drop in analog payment methods has opened the door for digital assets, making their value exchange a more common aspect of the economy.
Online shopping has led shoppers to look for options beyond cash and paper checks. Business Insider forecasted that checks could vanish entirely by 2026! Although this prediction was daring, it has proven true for business-to-consumer (B2C), consumer-to-business (C2B), and peer-to-peer (P2P) markets as digital alternatives to checks continue to emerge.
Payment applications like CashApp, Zelle, Venmo, and PayPal are now part of everyday life for consumers, but businesses are lagging. According to Payments, 81% of businesses worldwide (and 41% in the U.S.) still use paper checks to pay other companies, making it the most prevalent method for business-to-business (B2B) transactions.
Right now, digital value focuses on consumers, but B2B is falling behind.
Definition of Digital Value
Digital value refers to the economic benefits and worth derived from digital assets, including digital products, services, and data. It encompasses the value created through digital channels such as websites, social media, and mobile apps.
Digital value is crucial to digital transformation, as it integrates digital technologies into all business areas. This integration enhances operational efficiency and drives innovation and growth. By leveraging digital value, businesses can unlock new revenue streams, improve customer experiences, and stay competitive in an increasingly digital world.
The State of Digital Value
Today, digital value has increased significantly and can be divided into four categories:
1. e-Gift Cards, Digital Cash, and Branded Currencies
This is the largest digital value class. It includes open-loop and closed-loop prepaid cards, airline miles, loyalty programs, and gaming points. Combined, these are valued at over $2 trillion. Amazon gift cards, for example, offer convenience and added benefits like fuel points, making them a popular gift choice. The global market for open- and closed-loop prepaid cards is expected to hit $3 trillion by 2027.
2. Cryptocurrencies
The fastest-growing digital asset class, cryptocurrencies are projected to reach a $3 trillion market cap by 2030.
3. Web3 Assets
These include DAOs, NFTs, DeFi, and GameFi. Together, they represent a shift toward decentralized ownership, redefining how people think about value, work, and exchange.
4. Fractionalized and Tokenized Assets
Think fractional shares, ETFs, and public REITs. These are expanding access to investment and are forecasted to grow from $310 billion in 2022 to $16.1 trillion by 2030. By the end of the decade, tokenized assets could represent 10% of U.S. GDP.
The 2020 pandemic sped up the shift to digital payments as consumers sought contactless options and faced limited access to cash. Since lockdowns, 76% of consumers have increased their use of mobile wallets, and 90% plan to continue using them frequently post-COVID-19.
By 2021, 76% of adults worldwide had accounts with banks or mobile money providers, making digital payments mainstream globally.
However, digital currencies often face challenges in everyday use due to their isolated systems, creating friction for consumers. The biggest hurdle is making digital currencies work with each other and traditional cash systems.
For example, using airline miles to pay a restaurant bill requires converting them into another currency, like a gift card, highlighting the complexity of using digital value in daily transactions.
Strategies for Creating Digital Value
Creating digital value requires a strategic approach that aligns with business goals. Here are some effective strategies for creating digital value:
Invest in Digital Marketing: Enhance your online visibility and reach a wider audience by investing in digital marketing efforts such as search engine optimization (SEO), pay-per-click (PPC) advertising, and social media marketing. These tactics can drive traffic to your website and increase brand awareness.
Develop a Strong Brand Reputation: Build a strong brand reputation by creating high-quality content, engaging with customers on social media, and providing excellent customer service. A positive brand image can foster customer loyalty and attract new customers.
Leverage Data Analytics: Utilize data analytics to gain insights into customer behavior, preferences, and needs. This information can inform business decisions and help tailor products and services to meet customer demands.
Invest in E-commerce: Invest in e-commerce platforms and technologies to provide a seamless online shopping experience. This can enhance customer satisfaction and drive sales.
Develop a Growth Strategy: Formulate a growth strategy that includes expanding into new markets, developing new products and services, and acquiring new customers. A well-defined growth strategy can help businesses scale and achieve long-term success.
Examples of Digital Value
Here are some tangible examples of digital value:
Gift Cards: Gift cards are a popular form of digital value. They can be purchased online and sent to recipients via email or text, making them a convenient and versatile gift option.
Digital Products: Digital products, such as e-books, music, and software, represent another form of digital value. These products can be easily distributed and accessed online, providing value to creators and consumers.
Online Services: Online services like streaming and software-as-a-service (SaaS) platforms are prime examples of digital value. These services offer convenience and accessibility, enhancing the user experience.
Digital Payments: Digital payments, including mobile wallets and online payment platforms, are a significant aspect of digital value. They provide a secure and efficient way to conduct transactions, benefiting businesses and consumers.
Assessing Digital Value
Assessing digital value requires a comprehensive approach that considers various metrics and factors. Here are some key ways to assess digital value:
Revenue Growth: Measure revenue growth from digital channels like e-commerce and online services. This metric indicates the financial impact of digital initiatives.
Customer Engagement: Track customer engagement metrics, including website traffic, social media interactions, and customer satisfaction. High engagement levels often correlate with increased digital value.
Brand Reputation: Evaluate brand reputation metrics, such as brand awareness, loyalty, and customer advocacy. A strong brand reputation can enhance digital value by attracting and retaining customers.
Return on Investment (ROI): Calculate the ROI of digital investments, such as digital marketing campaigns and e-commerce platforms. This metric helps determine the effectiveness and profitability of digital initiatives.
Aligning Digital Value with Business Goals
Aligning digital value with business goals requires integrating digital initiatives with the company’s overall business strategy. Here are some steps to achieve this alignment:
Define Business Goals: Clearly define business goals and objectives, such as increasing revenue, improving customer satisfaction, and expanding into new markets. These goals will guide your digital strategy.
Identify Digital Opportunities: Identify digital opportunities that align with your business goals. This could include developing a new e-commerce platform, launching a digital marketing campaign, or adopting new technologies.
Develop a Digital Strategy: Create a digital strategy that aligns with your business goals and objectives. This strategy should outline the steps and resources needed for your digital initiatives.
Measure and Evaluate: Continuously measure and evaluate the effectiveness of your digital initiatives. Use metrics and feedback to make data-driven adjustments and improvements.
By following these steps, businesses can ensure that their digital value initiatives are aligned with their overall business goals, driving growth and success in the digital age.
The Future of Digital Value
The economy is shifting to a digital-first world, and this change is driving the future of digital value.
The Boston Consulting Group forecasts that $16.1 trillion in physical assets will be digitized and tokenized by 2030, making digital value more accessible. Gift cards are becoming increasingly popular, with 62% of customers preferring digital options.
The global gift card market is projected to hit $1 trillion by 2027, but consumers want more flexibility, like cryptocurrency and fractional shares.
Corporations are adopting APIs to improve payment processes, potentially reducing new providers’ onboarding times by 90%. This shift creates opportunities for platforms like ezcards.io, which can integrate with various payment providers.
As digital payments advance, a strong infrastructure is essential to back all digital assets. Runa is creating a system to facilitate B2C, C2C, and C2B transactions, enabling individuals to maximize their earned value.
