As we stand at the gates of the world’s greatest generational wealth transfer, from the Baby Boomers down to their heirs and descendants, banks are positioning to capture those assets. This requires a long-term multigenerational strategy, one for which a bank must start sowing the seeds now so it can win later—perhaps much later.
In Senior Banking That’s Built for Families, Dylan Lerner, Senior Analyst in Digital Banking at Javelin Strategy & Research, looks at how seniors manage their banking relationships. Too often, the attempt to capture an extended family relationship ignores the seniors. Lerner’s report looks at how banks can work with these seniors, fostering their independence by focusing on their particular needs.
Youth Banking for Parents
What banks really want to do is keep or attract the seniors’ money, which will be in motion to heirs and descendants before long. If the bank already has the senior customer, there’s no guarantee that money stays with the bank. If the customer is the heir who is going to receive the assets when the senior passes away, the banks want to bring that senior in early—then keep the money there.
For a bank seeking to acquire multigenerational assets, here’s a key question: How do you position yourself to become the family bank? How do you build a relationship with the child to become their primary bank into their later years? With seniors, how do you position yourself to keep, maintain, or attract that banking relationship?
“We call it youth banking that’s built for parents,” Lerner said. “At the end of the day, even though the child is at the heart of that relationship, you have to go through the parent. It’s not as simple as just reaching one person. If you really want to dig deep and own a family banking relationship, you have to position yourself to engage the family dynamic. Whether it’s a senior who is advancing in age and needs more help or a younger person getting married and having a child, position yourself to own those relationships.”
Seniors Welcome Digital Banking
When it comes to serving seniors, financial institutions frequently emphasize security over more fundamental things such as financial fitness or collaborative experiences. The focus is on how to protect their money or how to prevent scams and fraud. But seniors and their families have other, more important needs.
“It’s really about helping them manage their money, not necessarily just protect it from scammers,” Lerner said. “Security is important, but it’s not everything. But that seems to be the blind spot that the industry has at the moment.”
Javelin’s data shows seniors are more open to technology than many banks realize. They might be using it in different ways from younger people, and they may not be the most savvy users, but they certainly use it. Too often, that idea gets lost because marketing banking services to seniors usually emphasizes ease of use rather than what they will get from the digital experience.
“We don’t give them any other value proposition outside of ‘It’s so easy. Grandma can do it,’” Lerner said. “In fact, we’ve had to adjust some of our forecasting to account for the fact that seniors didn’t plateau in their adoption of digital banking. They’re continuing to adopt it.”
What made seniors more comfortable with digital banking is using apps for other aspects of their life. Older people have obtained smartphones and built up comfort with the devices over time. Lerner noted that this group is not just banking online but also moving to mobile.
Opening Up Access
A few banks are moving forward in the area known as entitlements, which involve giving someone else access to digital banking accounts, a tactic more common in business banking.
“A business might need to let its accountant have access to things, but we’ve seen that come up with seniors as well,” Lerner said. “One example in the report is what they call caregiver banking, which is essentially entitlements. If I’m an older consumer senior and a Huntington bank customer, I can allow my caregiver, whether it’s my child or a professional, to have limited access to some of my banking and financials so they can help me pay my bills, make sure I’m not getting scammed, and ensure that I’m making ends meet.”
People do not necessarily want to change banking relationships. Baby Boomers are the least likely generation to switch banks. They might lack the motivation to switch that a younger person might have, but they also have fewer immediate financial needs. Older people tend to have fewer loans and live off a fixed income in retirement.
Banks need to overcome a lot of inertia to make people switch banks. A better strategy requires banking to evolve, becoming less about the individual and more about financial relationships.
Bringing the Pieces Together
Banks have an opportunity to embark on a broader strategy, moving beyond those baby steps and creating bigger experiences for their senior clients. It could be fostering independence for seniors or bringing in their family members and meeting their needs.
“A lot of vendors we talk about in the report claim you can just plug and play with their offerings,” Lerner said. “It’s not enough to plug and play. You need a strategy. Family banking needs to be holistic. You have to take a step back and create a strategy, because if you don’t, what you’re going to end up with is an add-on that’s not integrated within your digital strategy.”
Many banks see seniors as a problem. A community bank might have a customer base that’s 80% age 60 or up. They’re scared that half of that base will be gone in 20 years.
“For them, it’s this existential threat,” Lerner said. “We tried to shift the thinking to look at it as an opportunity. Some banks are going to focus on getting the Gen Zers. The case we try to make is, maybe you can reach Gen Z through their parents and grandparents. Maybe you can find that financial dynamic between them and their families and build a strategy that brings those pieces together.”
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