For Claudio R., 82, the pandemic has meant using a smartphone banking app for the first time. Like many older people in Italy, he’s been heavily reliant on cash in the past and is not as familiar with technology as young customers. “My son and nephew told me my money is secure, that nothing can happen to it, and I’m feeling day by day more confident using online banking. But I’m always worried about pressing a wrong button,” he says.
With the pandemic making it harder for older people to go to bank branches, ATMs, and post offices, many have had no choice but to adopt digital banking to manage their money and bills.
Thus the question: Can fintech mate the world more inclusive? The answer is yes. As populations age and birth rates decline in many parts of the world, digital solutions have an important role to play in ensuring financial well-being for older people. According to data, globally, the number of people aged 60 years or over has more than doubled since 1980, and the share of older adults is projected to double again by 2050.
The fintech landscape is nowadays dominated by an infinite number of applications that have hit the market over the past couple of years, running the gamut of financial services — peer-to-peer payments, wealth management, smarter investing, easier charitable donations, and more.
But the majority of these are developed due to better serve the Millennial user base, from a flashy user interface to language that speaks to people who are already deeply familiar with hi-tech and smartphones. This puts such apps out of reach for many seniors, who — needing more education on how to use fintech to their advantage — may discount these emerging financial service options due to lack of patience, knowledge or even trust.
On with far more savings and investments than their younger counterparts, those over the age of 65 have the most to gain from fintech— and vice versa. According to a study by the Pew Research Center, senior smartphone usage rates are booming year by year, and for fintech companies is time now to assess and retool services to better suit older customers, developing more age-inclusive apps and customer service.
The “silver” digital revolution in Brazil
Also Brazil is embracing digital solutions for its senior customers. At Nu Pagamentos SA, Latin America's largest digital bank, new customers aged 60 or older jumped 50% in the second quarter of last year, to an average of 30,000 per month. Banco C6 SA, another digital bank, reported a 160% month-over-month rise in new customers aged 55 and over in July 2020, while PicPay, a digital wallet ruled by Banco Original SA, reported 54% growth in its seniors segment between March and August 2020.
Experts agree the pandemic outbreak has speeded the adoption of digital solutions. According to a study by IBOPE, a Brazilian research and consultancy firm, 80% of those aged 55 years or older have changed their financial habits during the pandemic; nearly half stopped visiting bank branches altogether. The pandemic "changed customer behavior, and senior citizens caught up very fast,” told media Maxnaun Gutierrez, head of products and individuals at Banco C6. "They are usually banked, they have high income and buy more products than the young, resulting in more revenue for the bank”, that’s why, ”it is important for any new bank in Brazil to have them,” underlined Gutierrez. For fintech companies, winning this client base could have an outsize impact on their bottom line.
Banco Agibank SA has shifted strategy to clients aged 50 and older, particularly those with low- to average incomes. According to Marciano Testa, Agibank CEO, and founder, “there is no clear and appropriate value proposition for this segment, and whatever services they do receive are of extremely poor quality.” The trend in Brazilian demographics is towards an aging population in the coming years “and the lack of value offered for this audience when it comes to financial services makes it a relevant, addressable market," Testa noted.
Interestingly, the bank's digital strategy for this age group relies in part on a brick-and-mortar presence. Agibank has opened 700 physical locations offering face-to-face assistance so far and plans to nearly double that number to 1,300 by 2023. Through these locations, Agibank aims to help older customers to become more familiar and comfortable with using digital products.
A different approach: old people aren't all the same
Ira Sobel, founder of Israel-based app Fintech4longevity, give us a different point of view. “The Covid-19 outbreak let us figure out how people aged 65 and over were treated as a single homogeneous category. Such a wrong generalization, especially in financial advice”. Based on trends in global financial systems, Sobel sees that there are key areas in which technology can play a role in serving the needs of older adults. And this is the goal of Fintech4logevity. The app’s main goal is making older people able to leverage their life insurance, to be able to monitor their wealth, and to understand their rights – maybe they are eligible to receive a higher public pension or medical coverage than they currently do.
“They also need to understand home equity and financial instruments like reverse mortgages, they have different needs such as how to optimize or lower their healthcare costs, they need supplemental income, they need someone to help them with their bills, and they need help with estate planning,” Sobel says. While this may be seen by some as the role of a financial planner, Sobel believes that technology is now reaching the point where a lot of this functionality could be brought together to provide solutions tailored to the needs of older people. Sole thinks that hybrid distribution (mixing humans and AI across all channels) is the right path of banking sector.
“I want to show start-ups an alternative or complimentary strategy to add this population to their roadmap and show them the potential of this market,” she says to media. “But I also want to increase awareness among financial institutions that overlooking this segment is a big loss for them. There are a lot of ways to unlock the opportunity of older adults through digital financial solutions".
