Unless you've been dormant for the last decade, it's pretty clear to all of us that there's a significant demographic shift occurring with consumers.
As Boomers get closer to retirement, Gen X & Gen Y (Millennials) are now the driving force behind the economy. Their expectations, mixed with an exponential growth in different parts of technology (storage, transistors etc.), are re-shaping industries including retail, financial services, healthcare, education & more as we know it. Here are a couple of interesting statistics:
- “$16 Trillion in Wealth Is Going To Be Exchanged Between Generations In The Next 30 Years.” –Wealth-X and NFP Family Wealth Transfers Report
- “This year millennials will overtake the majority representation of the workforce and by 2030 this hyper-connected, tech savvy generation will make up 75% of the workforce.” -U.S. Bureau of Labor Statistics
In order to tackle this, financial institutions and retailers need to address the needs of every generation (and every account holder). This is a pretty daunting prospect and is in fact highly correlated to the #1 challenge banks face right now (satisfying more demanding customers & retaining their loyalty) according to Temenos via The Financial Brand:
For simplicity's sake, I'm going to address Boomers (part I) and Millennials (part II) in these posts. However, Javelin research does a good job of segmenting into the 4 categories below. I will refer to these segments throughout the two posts:
From what I have witnessed (although every consumer is unique), a large number of Boomers:
- Have lost a lot of trust in the stock market, as many of them got burnt in 2008
- Are concerned about retirement and if they have enough to live off
- Struggle to know where to put their money as term deposits have provided low returns in recent years
- Have less have faith in mutual funds due to high fees and low returns in the last decade
How Boomers Bank
While a lot still like to visit branches, here a number of facts about their use of digital channels:
- 45% of Baby Boomers and Seniors actively use online or mobile banking (The Financial Brand)
- After online, their second most-used device is a tablet (Nielsen)
- They tend to have the longest online banking sessions and utilize online banking the most (The Financial Brand)
How Financial Institutions Should Address Boomers
With 75% of account holders currently having 4 or more financial accounts (Accenture) and the average household having 8+ financial accounts (The Financial Brand), there is a huge opportunity for banks and credit unions here.
Boomers are concerned about their finances and for the most part place a lot of trust in their financial institution. If banks and credit unions can provide interactive tools that allow account holders to see all of their finances in one place and can be used in branches, online, smart TVs and on tablets, this could be a big win for the user and institution alike.
Account holders can collaborate on ideas with an advisor in the branch and then they can take these tools home to share with their families (and educate their children). These families can learn how to:
- Find key areas where they can reduce spending
- Manage debts more effectively
- Set goals
- Find stable returns that can allow them to reach retirement quicker
While financial institutions benefit from:
- Greater loyalty
- Higher deposits
- An increase in IRA, money market & CD accounts
That is just one idea of how banks can target Boomers.
Do you have any thoughts on more?
Part II on Millennials will be released in the next week...