Developing age-friendly banking services in an increasingly digital age has been a rumbling issue for years.
Back in 2016, for example, the UK’s financial regulator, the FCA, published a series of papers on the need for age-friendly banking as the number of UK branches were halved.
Since then, the conditions that may risk causing financial exclusion for older customers have not lessened. Branch closures and the hacking back of ATM networks have continued at an accelerated pace in all European countries.
While banks have pointed to the popularity of mobile banking apps as their justification for these changes, older customers are not embracing digital banking with much enthusiasm.
Indeed, there is a stubborn gap between the digital capability of younger and older age groups. An OECD study reveals significant age-related differences in the use of technology. In its formal tests, on average, almost half (45%) of 25–34-year-olds scored at Level 2 or 3 while only 11% of older adults (55–65-year-olds) did the same and large number skipped the problem-solving assessment entirely.
UK charity and campaigning group Age UK identified the problems caused by branch closures and an over reliance on online banking way back in 2016. So it is striking how critical their 2023 report and research is. This revealed that over a quarter (27%) of 65+ aged customers predominantly banks face-to-face in a branch or other physical location (e.g., a Post Office) while three quarters of over 65s wish to carry out at least one transaction in a branch.
In addition, while digital banking applications have become more common, four in 10 older people (39%) with a bank account in Britain, which is equivalent to 4.09 million people, are not managing their money online.
All the relevant stakeholders – banks, governments, ATM operators – have not been reluctant to find solutions to how to maintain some branch services for all customers but most especially vulnerable groups like the elderly who prefer in-person services.
SHARED BANKING HUBS
In the UK, this is manifested by a programme of shared banking hubs run in association with the Post Office. These provide basic over the counter banking services with private rooms for consultations with bankers from a customer’s own bank.
As I have said before, the shared hubs programme has great potential. However, the speed of deployment is too slow and while over 50 hubs have been announced, this number is hugely overshadowed by the number of branch closures and communities who have lost all their branches. To put this into context over 50 branches have closed every month in the UK alone since 2015 and closure programmes are not letting up while only four of the 50 planned hubs are up and running as of March 2023.
Therefore, naturally Age UK is calling for the shared hub programme to be significantly boosted. They say when the shared banking hub concept is explained to older customers, half of those with a main bank account (49 per cent) – equivalent to 5.14 million people – said they would be comfortable using one. The charity adds this is striking when most customers have yet to experience one of these new hubs.
It is not only the numbers of hubs that must change but also how they are configured to deliver banking services. In this respect, the level of ambition displayed seems quite low. One example is how these hubs represent individual bank brands who provide face-to-face customer services on a rota rather than always allowing access to their trained staff in the hub. Any difficulty in seeing your own “bank manager” when you need them could undermine the value of these hubs to older customers.
Countries like the UK might learn from how other markets are responding to the need for age-friendly banking. For example, this year Spanish banks agreed to widen, not reduce, cashier services, provide more personalised support and adapt their digital services to encourage their greater use by elderly customers.
How Spanish banks intend to use their ATMs for age-friendly services demonstrates how this is one element of digital banking that older customers do get on with so long as the ATM is in a secure location like inside a branch.
Indeed, how the shared hub model can be so basic, does reveal a missed opportunity to use the latest digital self-service systems to provide services to older customers’ needs.
HOW TECHNOLOGY CAN SUPPORT SHARED HUBS
Banks will say face-to-face services are costly to deliver whether in their own branch or a new shared banking hub. Rising operating costs are a real barrier but there are imaginative alternatives like secure in branch video and voice banking to access a centralised group of skilled financial advisers that can deliver personalised services remotely and 24/7, while reducing operational costs massively.
This approach which we call Bank4Me could be leveraged to allow customers to access all the services of the bank in self-service mode and interact with the bank’s consultants via video and audio assistance,
Indeed, we have seen how the use of integrated digital assistants like our IOLE virtual assistant can guide and support customers who are uncertain about using digital self-service banking. IOLE offers fully automated assistance through voice commands and can complete g a transaction autonomously.
Shared banking hubs are a good thing and are likely to become more commonplace even if the pace of deployment remains slow. However, they are not a panacea for lost banking services unless there is a real investment in people, processes, and technology to make them useful for all customers who want and need face-to-face services in secure spaces that are convenient to them.