When it comes to demographic trends impacting financial services, there has been a heavy emphasis on how the Millennials or digital natives are going shake up how people bank.
However, there is a bigger demographic tidal wave hitting the sector. On average the populations of major Western societies are getting older. For example, in the UK, in less than two years, the number of consumers aged 65 or over will rise by over a million and in little over 20 years one in seven people will be over 75 years of age.
So how should financial services adapt to a sharp increase in the number of older consumers?
The industry is beginning to respond to this trend with a root and branch review of how services are designed and delivered. For example, the UK Financial Conduct Authority (FCA) launched its Ageing Population Project in 2016 to consider the strategies that banks, and other institutions should adopt to respond to this trend.
Know your customer
Older consumers of bank service aren’t all the same. However, there are some specific issues and obstacles that can be more relevant to older than younger consumers.
The growth in the number of older consumers (55 years +) is driven by major leaps in life expectancy. This means banks need to address both how the “older old” – people aged over 85 years – is the fastest growing age group; and how the massive generation of people born between 1946 and 1964 – the Baby Boomers – is entering retirement in greater numbers.
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The UK FCA’s Financial Lives Survey suggested that six in ten consumers older than 85 and two fifths of those older than 55 say they have a physical or mental condition lasting a year or more. By comparison, only 15% of adults aged 18-54 make the same assessment of their health.
While it is important not presume older consumers are vulnerable, there is evidence that as we become older we are more likely to have chronic conditions that affect our physical and mental capabilities. These and other conditions of growing older – poorer eyesight, hearing difficulties – can affect decision-making, memory, and dexterity that are important attributes for accessing financial services effectively. Any changes in their capabilities to make decisions is exacerbated by how older people are going to be making complex financial decisions in later life.
Balancing innovation with accessibility
Again, it is important not to generalise and it is obvious that many, if not most, older customers successfully use ATMs, which have been integral to how bank services have been delivered for over 50 years now. Nonetheless, the ATM, like bank services generally, will need to adapt to serve older customers because of how they are changing physically and mentally.
The ATM industry itself has identified the need to make ATMs more accessible. In 2017, the ATM Industry Association (ATMIA) published its “Maximising ATM Accessibility” guide. This sets out how banks have a lot more work to do to improve accessibility of ATMs to customers who are elderly. The Centre for Accessible Environments (CAE) has also set out nine guidelines to drive accessibility of ATMs (ATMIA).
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New generations of ATMs offer more intuitive interfaces but the extent to which the difficulties with using an ATM are to do with the graphical interface can mean the solution is really about software. This can mean a fleet of ATMs can be made more accessible to older customers through software redesign and upgrades done from cloud-based ATM software that allows new features and functionalities to be done remotely.
Changing physical hardware in the field is obviously difficult given the vast number and geographic dispersal of ATMs and how some many of the ATMs used by older customers to access their bank’s services are not necessarily operated by the bank but by third party networks.
Ensuring accessibility in a changing banking landscape
How can the rise of older customers be squared with the massive pruning of bank branch networks?
Studies regularly confirm older customers preference for accessing banking services in branches. According to the Social Market Foundation, older customers are more likely than younger ones to do all their financial tasks in a branch.
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A major finding of the Age UK report was how older customers would appreciate more modern branch designs including all branch functions on the ground floor, better managed queues and more comfortable seating. And, these are the features of the new hybrid digital banks that are emerging in many markets in Europe.
A vision for the future
The old teller line is totally removed and replaced by a core of smart self-service banking machines for cash retrieval, deposit and other functions. Around this digital banking area, space is being opened for informal or formal consultations with bank staff. New branch designs are making these spaces also more ideal for older customers who appreciate the time and space to consider their financial affairs.
A welcome desk is typically set up to enable staff to greet and check what exactly a customer is looking to do. The use of branch management solutions enable staff to not only welcome but guide older customers through using the self-service machines. Stagg can be aided by tablets devices to access customer data, recognise which customers are accessing a self-service device and be able to manage the setting up of one-to-one consultations.
Access to face to face services within new hybrid digital banks are essential but banks can also trial the greater use of video communications to enable virtual face to face consultations.
This can range from a purpose-built video conference room in a branch through to video interactions on a customer’s tablet, smartphone or computer. What’s also possible with some of these video conference services is an older customer’s friend, family member or professional adviser can join in the session.
Not just a trend, but a wider societal challenge
Responding to the ageing population trend isn’t just a challenge for the banking industry but for wider society. Technology can help banks deliver personalised services that take account of a customer’s age and capabilities and thus provide a customer experience that’s attuned to what the customer requires rather than just the bank. Smarter ATMs and other smart self-service devices can assist older customers to look after their own financial affairs.
Revolutions in how such systems are managed and updated as part of a more customer centric omnichannel approach can benefit older customers as much as they will for younger ones.
The freeing up of branch bank staff from mundane transactional work means they can be redeployed to provide better in-branch personal support for older customers who want assistance to handle simple or complex financial requests.