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EXCLUSIVE: “Hey, big Boomer! Spend a little time with me?” – Natasha de Terán in ‘The Paytech Magazine’

EXCLUSIVE: "Hey, big Boomer! Spend a little time with me?" - Natasha de Terán in 'The Paytech Magazine' | Fintech Finance

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.Natasha de Terán | Fintech Finance

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 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 rebellious by nature. Their positioning very often focusses heavily on these qualities – qualities that might do very well attracting the younger generation but can simultaneously alienate the older one.

This is particularly so if we remember that we are considering rebellion, disruption, youth and irreverence in the context of money. Money is quite a serious thing, and something you want to look after – particularly if you have accumulated quite a lot of it but have relatively short prospects of doing so again in the future. Suits might be a bit last year in Shoreditch, but grandpa might not identify with someone in sweats and trainers (the neos’ near-ubiquitous image), or grandma with folk that go outside in their underwear (the dress code adopted by Wise (then TransferWise) in an early media stunt. Positioning isn’t the only thing. It’s also worth exploring the sector’s marketing channels, products and product promises, the user interface and user experience.

While many an early-adopting parent and grandparent will have been introduced to fintechs by their children and grandchildren, many a fintech has since moved on from community-based recommendations to advertising. In theory, that could take them closer to the potential older customer – but it won’t necessarily in practice. For sure, older generations use social media, but are they ready to buy their financial services from social media? Is it appearing on Insta or ITV that will build their trust; is it on Twitter or adjacent to Tonight? Google and you will find ample case studies (and pitches) for how to market fintechs on social media – less so TV advertising.

And who watches most TV? The older segment – an average of five hours a day for the over-70s, compared to less than an hour a day for the under-15s. While Starling, Monzo, SumUp, Curve and Metro Bank have all run TV ad campaigns in the last three years and Revolut is looking to, they pale against the sustained presence of the high street brands on our screens.

Speed versus trust

If positioning and marketing are how you get to, and build appeal with, customers, at the end of the day success is down to your product proposition, service and delivery.

Payments – which is what we are ultimately talking about here – are pretty simple things on the face of it. They need to be accepted and they need to work. Selling a payments proposition to an audience of consumers that doesn’t tend to like to think about them isn’t a trivial proposition, but the last few years have given product marketers plenty to shout about, especially when it comes to reducing friction and increasing speed – and shout they have. Now, removing frictions and enhancing speed is great when you’re buying a coffee, passing through a ticket machine, splitting a bill or buying make-up on Insta.

But it isn’t necessarily your first thought if you are moving your pension around. If you are new to digital and/or have a deep wallet, being told that your money can move (away) invisibly and fast might not be the most compelling sell; security, trust and protection are probably more where your mindset is at. Handholding might appeal. Thankfully, for those in need of that handholding there are some fintechs rising to the challenge, including those combining tech and a physical presence – the UK’s Metro Bank and high street open banking pioneer OneBanks among them.

Together with YouGov, Metro Bank did a survey that showed that while more than half (51 per cent) of people agree they like to speak to someone face-to-face for banking purposes, this increases to nearly two-thirds (62 per cent) of over-55s. A recent report from Mobiquity on credit unions in the US, showed that customers under 30 were almost 20 per cent more likely than those over 60 to switch to a provider with better digital banking tools. For older users, ‘great customer service’ was more important. Kat Robinson, director of customer experience at Metro Bank believes that there’s lots of value in the older customer group. “And if our customers want us to be on the high street, that’s where we’ll be.” Not all of the more mature customers need or want face-to-face banking, of course, and could perfectly well be served by digital-only providers.

Only they largely aren’t being. Vinay Prabhakar, VP at Volante Technologies, says: “It’s just a question of meeting them where they are and providing them with the products and services they need in the way that works for them.”

Prabhakar believes there is a problem in product design, in marketing, in UX and UI – all of which combines to alienate and confuse older demographics. “I have seen this play out in my own family – we are talking about smart older professionals who have no lack of intellectual capacity and who have been experts in their fields. These are people who actively use technology for other purposes and have a good grasp of their phones and yet who are bamboozled by the interfaces and alienated by the marketing. By and large, providers are not thinking about what the older demographic wants – more control and transparency because they have wealth. And security is paramount to them – more important, perhaps, than it is to the younger demographic.”

He believes that the UX and UI designers are – if not all young themselves – designing for the younger generation.

“There’s a huge untapped market out there that needs to be addressed. We’re very passionate about payments for good at Volante, which, means payments working for everyone. But this isn’t just a concern about underserving a vulnerable demographic. What we also see is a huge business opportunity being missed.”

Follow the money

There are some encouraging signs of change. As we were preparing this edition for print, Revolut reported a 215 per cent uptick in users over the age of 55, ‘signalling a new age of silver swipers’. Well done, Revolut – but this silver crew has been online and swiping for decades: what took you so long to get to them?What is curious in all of this is that while fintechs have been ready to upend every other piece of perceived wisdom in the sector, they haven’t upturned the traditional customer acquisition model.

‘Get’em young and keep ’em long’ made sense when changing was tricky, alternatives scarce and youth loyal – less so today when changing is easy, there’s competition aplenty and youth is fickle. For sure, it made sense for fintechs to start off with the digital natives, and, fair enough, going after hefty balances when interest rates were near zero and there was easy-to-get financing, might not have been that compelling a proposition. But youth is now a crowded market; time horizons are short; financing is no longer freely found and rates are rising. Given all that, what’s wrong with going the extra mile to get that sticky big spender, even if they do have a shorter runway?


 

This article was published in The Paytech Magazine #12, Page 34-35

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