On average the populations of major Western societies are getting older. 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.
While this will bring challenges for the economy as a whole, this will be a demographic tidal wave for the banking sector. So how should financial services adapt to a sharp increase in the number of older consumers?
Getting the foundations right
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.
The industry is already beginning to respond to this trend. 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.
While it is important not to 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. 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. These and other conditions of growing older – such as poorer eye sight or hearing difficulties – can affect decision-making, memory, and dexterity that are important attributes for accessing financial services effectively.
One key area that banks need to get right is the ATM and self-service banking devices. Given ATMs and self-service banking is integral to how bank services are used today, they can play a key role in meeting the needs of an ageing population.
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.
When seeking to enhance the accessibility of ATMs, banks have two options: modify the physical hardware, or modify the software governing the ATM, or both. The Centre for Accessible Environments (CAE) sets out nine guidelines to drive accessibility of ATMs (ATMIA). These cover areas such as access and location, location and layout of operating features and screen design.
Evolving the bank branch for older customers
Studies regularly confirm older customers’ preference for accessing banking services in branches. The current pruning of the bank branch network is unlikely to be reversed but plans for branch transformation could be the platform for developing more age friendly branch services:
- New branch designs are making these spaces more suitable for older customers who appreciate the time and space to consider their financial affairs. The traditional teller line is replaced by a core of smart self-service banking machines for cash retrieval, deposit and other functions, while the space is being opened for informal or formal consultations with bank staff.
- A welcome desk is typically set up to enable staff to greet and check what exactly a customer is looking to do. Staff are 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.
- Modern branch designs including all branch functions on the ground floor, better managed queues and more comfortable seating
- 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. 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.
Enable older customers to control their finances
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.
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 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.