Until recently, there was reluctance amongst some to embrace digital banking. And then the coronavirus spread. The pandemic has made many more people move to digital channels out of necessity.
In their push to stay relevant, most banks have concentrated their digitisation efforts on the requirements of Gen Z and Gen Y, a growing potential customer base that takes frictionless experiences and personalised digital interactions for granted.
While they’re more likely to adopt digital banking, they’re also more choosy and considering how easy it is to change banks, less loyal. The focus then has been on developing the right mobile app experience with the intent to attract, resonate with and retain younger consumers.
However this digital transformation – its timeframe compressed from years to weeks – has transcended age boundaries, forcing previously hesitant but loyal customers to move online. For example, a recent McKinsey study conducted in Germany found that the uptake of digital channels since the start of the pandemic spanned all age groups. While it was especially high in the under 25s, the increase in the over-65 age group was 107 percent.
By concentrating only on younger consumers, banks could potentially miss out on the opportunity to meet the needs of this older cohort, who are often portrayed as being less digitally savvy and mistrustful of digital channels, especially when it comes to banking.
The age(s) of digital transformation
While this age distinction may be true – and it is often useful to understand the attitudes and behaviors of different age groups – people don’t always fit the box into which they’re placed. These artificially engineered generation groups are broad categories that actually contain far more subtle subsets characterised in part by how comfortable a person is using technology and whether they want to have it in their lives.
Plus, some of the assumptions made 10+ years ago about older customers don’t necessarily apply in 2020; one misnomer, for example, being that you can’t reach a Baby Boomer on social media. In fact, 90 percent of people in the 55–75 year-old range have a Facebook account they actively use. And if that’s the case, can we continue to assume that the older generation are not tech savvy and don’t use – or don’t want to use – mobile apps or care about the user experience? Just because a person has reached a certain age doesn’t mean they’re not taking out new mortgages, loans to start a new business, or saving for a sports car or dream holiday.
Why is there a difference in digital banking uptake between generations, other than the fact that younger generations have grown up in a digital world? One reason cited in the McKinsey study is that 16 percent of the older generations surveys simply have no need for the solution and there’s not much a bank can do about that. However banks can address other factors that impact uptake: a lack of confidence in security (30 percent), usability problems (20 percent) and limited functionality (18 percent), which prevents users of all ages from enjoying digital banking’s ultimate aim: on-the-go convenience. What if a bank could solve these concerns and offer a helping hand? What if they could deliver the varied products and more complex financial services that specifically add value for older customers, all while optimising the digital experience and managing risk?
The trust chasm
A significant stumbling block for those who have resisted the move to digital banking is the fear that it exposes them to greater risk, a concern that also applies to the younger generations who already use these channels. And unfortunately, these concerns are not unfounded. The techniques of today’s cybercriminals are becoming ever-more sophisticated and the news is often dominated by headlines of high-profile scams, such as the recent Experian SA data breach.
Another barrier to adoption is the lack of trust some have in their own ability. They may have tried using digital banking channels but found them too difficult to navigate. And when coupled with the fear of making expensive transaction mistakes, or exposing themselves to cyber attacks, they have simply abandoned the endeavor.
The banks that will have the greatest success are those that can instill confidence in their consumers – regardless of age group – to take the trust leap. They will provide assurance that their digital banking solution is safe, easy to use, and intuitive. In short, that their customers are not going to get lost and they will be protected.
Facing and embracing the change
The world will never go back to the way it was. The pandemic has proved the business case of remote working and digital channels. To stay relevant now, and after this pandemic has passed, banks will need to move beyond crisis management and simply maintaining “business as usual”. It’s an opportunity for them to rethink their digital transformation strategy, concentrating on relevant customisable and customer-focused journeys that will, ultimately, appeal to all users. Because let’s face it, none of us are getting any younger.
Going forward, banks will need to invest more in catering to the needs of older generations without alienating their younger client base – developing solutions that transcend demographics.
Central to this is an omnichannel strategy that facilitates a smooth digital transition, but that also allows customers to choose how they want to do their banking. There’s no more categorisation of “in branch”, “online” or “mobile”. The commodities that banks offer are no longer what differentiates them. You don’t go to your favourite restaurant just for the food; you go for the overall experience – the ambience, the service, the music. By offering richer and more meaningful services, and providing support and advice when needed, across all channels, a bank can ease the progression to this digital lifestyle. Digitally engaged customers generally tend to be happier – and more importantly – loyal.
The differentiators now are trust, user experience and security. It’s about enabling customers to interact whenever, wherever and however they want.