Generation Overlooked: s Serving silver user GUEST EDITOR án Natasha de Ter
THE CASE FOR AGE-FRIENDLY BANKING
Hey, big Boomer! Spend a little time with me? ‘Meet your customers where they are’ is business logic 101. Fintechs are doing very well in meeting younger customers where they are – penetration is almost total in the coveted (if fickle) Millennial and Gen Z markets. But how are they doing with older (stickier) generations? In these pages, Guest Editor Natasha de Terán explores how well fintechs are appealing to, capturing, and serving ‘silvers’, finding they should do better for their own bottom lines as much as anything else Depending where you live, the older demographic is over 50, over 65, or (in Sudan) over a sprightly 40. Here in the UK, the marker seems to be set at a more reassuring 55, over which there’s a chunky number of us. It’s a demographic with an average household wealth of more than £800,000 – as compared to Gen Z and Millennials’ average of £155,000. And it’s a generational group that has lived through an enormous technological change – your average 55-year-old professional will have seen typing pools, Dictaphones, telex and fax machines, central switchboards and un-networked terminals; they will have transitioned through word processors and MS-DOS, dealt with 3.5” and floppy disks, dial-up modems, a nascent internet, the advent of the mobile, the portable computer and more. Today, he or she will undoubtedly have a smartphone, perhaps a wearable, a home PC and probably a tablet. They will use
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Zoom and Teams and likely have some social media accounts; they’ll communicate by WhatsApp and email and shop online. Digital dotards they are not. Banks everywhere have always tried to capture customers young – and keep them. Customers being lazy sorts, tend to stick with them. Fintechs, challenger banks, open banking, price comparison sites and the current account switch service were all supposed to change that. Have they? Not so much for the older groups. Until they were forced to, mature users didn’t even take up online banking. As a 2022 YouGov poll revealed, the highest rise in usage for online banking during the pandemic was among the 55-plus age group where 60 per cent of those surveyed used the service more often. In other words, it was not until they didn’t have a choice. What’s more, they’re not switching their accounts to move online. The current account switch service (CASS), which was specifically designed to stimulate account mobility and improve competition in the banking sector, was introduced in 2013; by March 2022 just eight million accounts – somewhere around 10 per cent of the total number of UK accounts – had switched using the service, or around one per cent a year. Is that because the older generations aren’t aware of it? Far from it, Pay.UK statistics show that if close to half of those under the age of 25 are aware of the service, 80 per cent of those in 55-64 age bracket are, as is a whopping 91 per cent of those who are over 65. That younger generations are the most fickle and mobile, and older generations are the stickiest appears counterintuitive. Because, if incumbent banks have failed to deliver value and service, it’s the older generations that have suffered the most by sheer stint of time (and money) they have spent with their banks. These are, by and large, the wealthiest and most reliable customers. They provide stability, liquidity – precisely what
challenger banks seek. And yet, while there are some notable exceptions, of course, by and large, the neobanks (and wider fintech sector) is ignoring the older demographic. Does it matter? What are they missing? Firstly, an opportunity. As well as wealth being stacked old, the population is also skewed old: half the adult UK population is over 50, a quarter of it over 60; and, between them, they own more than a third of SME businesses. The situation is not unique to the UK. As we explore elsewhere in this section on the Generation Overlooked, Spain and Singapore have even more acute issues and are seeking to make more of the opportunities presented by an older demographic. Secondly, dissatisfaction. People of 50 or more lived through the financial crisis and its aftermath as adults; they have seen bank runs and insider trading convictions; fines for personal protection insurance, Libor and other forms of mis- and over-charging; they have read about misconduct decisions and heard about competition inquiry findings. If youth feels that finance wants shaking up, the older generation knows it does. Thirdly, disenfranchisement. Far from all older generations need or want banking in person, are attached to bricks and mortar, to cash, or to in-person customer service. But those that are, are fast-losing their access. In return, they are given online banking services and apps which, in the incumbent banks’ eternal race to ‘get ‘em young’, are not intentionally designed to appeal and work for an older demographic. There could be a host of reasons why these hard-done-by account holders aren’t moving from their current providers (or at least not much), or multi-banking like their younger peers – laziness and (misplaced) loyalty, being the two most obvious. But how about we consider whether they feel there’s anywhere for them to actually move to? Fintechs are disruptive and youthful by definition and often irreverent and
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