Baby boomers are still a force to be reckoned with. By 2021 half of the U.S. population will be over age 50 and they will control 70% of disposable income. As financial institutions (FI’s) scramble to appeal to millennials and younger groups that will fuel the future, they cannot afford to ostracize the baby boomers.
Consumers born between 1946 and 1964 account for about two-thirds of America’s bank deposits. The balance of wealth isn’t likely to change for another ten years. The American Bankers Association estimates new products and services aimed at baby boomers could create up to $82 billion in deposits and $443 billion in investable assets. Boomers are a demographic worth pursuing.
Baby boomers don’t think of themselves as “old”. They are still active, working, and embracing technology when it fits their lifestyle. FI’s that categorize baby boomers as “senior citizens” or slow technology adopters are making a mistake. Millennials and boomers share similar views about how they want to interact with their financial institutions.
Online banking is a good example. Baby boomers may think of their financial institutions in terms of physical branches and tellers instead of only a name on a credit card or a mobile app. But they still appreciate the convenience of app-based features like remote check deposit, suspicious account activity alerts, low balance notifications, and credit card due date reminders. Some studies suggest the number of boomers that rely completely on mobile apps for banking services will rise by over 50% over the next three years.
Baby boomers pay their bills online and use FI websites and apps to check balances, transfer funds, or do other business. FI’s should make sure these services are available on all platforms and design their application interfaces so they don’t impede the ability of older customers to use them. Include on-screen instructions or tips that clearly show customers what to do next. While a millennial may naturally swipe the screen to find more information, boomers sometimes require more explicit direction.
Most of the app designers are millennials themselves. They may not be thinking about adapting their interfaces and systems to be attractive to their parent’s generation. With half of baby boomer banking customers possessing over $100,000 in investable assets, FI’s would be foolish to publish apps that confuse those who are not digital natives. They don’t want to turn these wealthy customers away from the FI’s latest products and services.
Another reason for shifting some attention back to the boomer population is their loyalty. Customers over 55 years old are inclined to continue doing business with financial institutions they have patronized for years. Ignoring this group by spending most of the marketing budget wooing millennials, however, will try their patience. People in all age groups want to believe companies appreciate their business.
In a Gallup poll, nearly two-thirds of baby boomers surveyed said they were indifferent or dissatisfied with their FI relationships. This statistic indicates the emphasis FI’s have placed on pursuing millennials has left the boomers feeling unconnected and unappreciated.
Here are a few areas where content and campaigns aimed directly at baby boomers can yield positive results:
Identify customers who have accumulated assets worthy of discussions about annuities or other investments and engage them with educational material, retirement calculators, etc.
Information about tax advice and trusts can be well-received when directed at high-value individuals most interested in strategies for distributing their wealth. Promote the FI’s estate planning professional services offerings to this group.
Triggered communications allow FI’s to approach account holders at the right time. Push out material featuring tips and advice about what to do with the money in certificate of deposit accounts as each CD nears maturity.
Seize the Opportunity
Opportunities for improvements abound. FI’s can focus on encouraging their older customers to be comfortable with digital products, prompting boomers to conduct more of their business digitally. This will allow FI’s to track activity, manage relationships, and communicate with their best customers (in terms of assets) more effectively.
Financial institutions have two lucrative markets to serve. They should consider re-allocating a portion of the resources dedicated to millennial product development and marketing. A strategic shift today will allow FI’s to grow their businesses now with baby boomers as they continue to attract millennials and build revenue streams for the longer term.
By 2025 millennials will make up 75% of the workforce. This group is famously fickle when it comes to brand loyalty and they've been known to switch brands when a company makes a mistake or they aren’t treated as individuals. What does this mean for financial institutions? What must they change to earn loyalty from their millennial customers and avoid excessive customer churn?
Millennials are more likely to change banks or credit unions than other generational groups. If they have a problem, they aren’t shy about switching their accounts. However, studies also show the millennials are less likely to report problems to financial institutions! This suggests FI’s need to be skilled at identifying potential trouble spots and they must communicate effectively with their millennial customers to ward off negative experiences.
Examples might include predictive analytics that allow an FI to foresee credit score changes that might affect interest rates or warning customers about low account balances before they experience overdraft fees.
Making it easier to report problems is also a practical strategy for retaining millennial business. This generation uses a variety of communication channels so make sure they can voice their concerns via mobile apps, social media, text message, and email. FI’s obviously need to ensure they employ mechanisms to respond quickly to complaints or issues customers raise through these channels.
A Seamless Experience
A unified, personalized experience resonates with the millennial crowd. FI’s must continue efforts to combine isolated data repositories so they can leverage information gleaned from multiple customer relationships. Portals that offer customers access to financial products in a single environment can be a differentiating factor that encourages loyalty. Millennials are more focused on convenience than previous generations. They will welcome a unified dashboard where customers can retrieve all their financial documents on demand.
Mobile must be part of the strategy. Millennials use mobile apps to check on balances and transactions, transfer funds, or originate person-to-person money exchanges. These mobile activities must be quick and easy. This generational group abandons applications that take too long or require too much hoop-jumping to complete a task.
A Personalized Experience
After convenience, personalization is probably the most important aspect of millennial business relationship nurturing. Data must be accurate and deployed at every customer touch point. Millennials want to feel their FI appreciates their business and knows them as individuals. Otherwise, banking services become a commodity easily replaced by organizations the customers perceive as being different, such as branchless neo-banks.
An omni-channel experience is especially relevant for millennial customers. They want to choose how and when they communicate. Be prepared for conversations that begin in one channel but transition to others on the whims of millennial customers. Whether on phones, tablets, computers, or in the branch, millennials expect their historical interactions will be fully accessible and interconnected. Think of customer communications as a platform instead of a collection of vertically oriented pipelines of information.
Millennials may be un-enamored with conventional banks, but as they mature and their financial requirements grow, they will need the guidance and support established FI’s can provide. Very few millennials say they are confident about their financial acuity. By providing the frictionless environment the millennials desire today, FI’s can continue growing and nurturing their customer relationships. This will position them as the go-to resource when millennials need car loans, mortgages, investment accounts, or life insurance.