Do Your Mature Customers Want an Enhanced Experience?

I recently wrapped up another stint as a faculty member of the Graduate Banking School at the University of Colorado (GSBC).  I teach a banking technology class to first year students.  A big part of my instruction is helping these future banking leaders understand what types of banking technology decisions they will face, particularly related to who their future customers will be.  If you are a regular reader of my posts, you will have noticed that I write often about how FIs will need to create an engaging experience for young millennials and Gen Zs. After all, it is these demographic groups that will make up the bulk of your future customers in the coming three to eight years.  Makes sense that we should rightfully consider how to attract and retain these younger prospective customers.  But one student in my class asked about the effect of shifting to targeting younger customers would have on the bank’s older customers, older Gen X, baby boomers and even some super seniors.  And a very good question it is.

Let me restate the question this way: if our institution changes its focus from transactions to engagement, changes the traditional function of the retail branch, added gamification to the mobile experience and other similar steps targeting younger potential customers – will this offend and potentially run off our existing, older customers?  If the answer was, absolutely, then any banker would think twice about implementing the needed changes in banking focus. Why? Because those older customers represent significant deposits and if you lose a baby boomer that has an aggregate $100,000 in deposits and gain a Gen Z that has an aggregate of $1,000 in deposits, you are going backwards. Yet, you cannot ignore the younger prospects because you WILL lose the older customers, sooner or (hopefully) later.  The key is to keep all of your existing high net worth depositors while at the same time, building up a base of younger customers that represents future deposit growth for many decades in the future.  This could constitute a delicate balancing act.

Let me state right up front that I believe that we don’t give our more senior customers more benefit of the doubt related to adopting new technologies or being off put by engagement focused changes in how an FI provides service. My mom is 94 years old, and she uses her tablet to make remote deposits of checks she receives.  My mom is a tech adopter; she understands what the value of the remote deposit technology is for her and uses it to her benefit, in this case, to make a deposit at a time and place of her choosing. Yet, I heard from many in my GSBC class that many older customers come into the bank and want to chat up their favorite teller or CSR. The stated reason of their visit is to see if their social security deposit was posted (“Yes, Mrs. Jones, it posed on the 3rd, just like is has for the previous 363 months …”). But the bank becomes a destination where they get to interface with other humans with whom they can personally interact, and my mom makes these types of visits to her bank.  But are we saying that if there was not a teller line or four customer desks in a quadrant around the lobby that my mom and other seniors that visit their branches would stop going?  Would withdrawal their funds and march across the street to a more “traditional” bank?  I think not…

I advocate for banks to reimagine their branches to be focused on engagement instead of transactions.  For the teller line to convert into a problem solving “genius” type bar.  To get rid of the customer service desks and add in tables where potential customers can pick up and interact with the out of branch devices through which nearly all of their transactions will occur. To enable customer education through teaching about tools, tips and other important usability features, such as how to properly setup alerts so customers can monitor account activity.  Does that mean if a senior walked into a branch where that activity was occurring, they would turn around and walk out?  Nope. The people that they want to interact with are there, maybe not behind a teller station or sitting at a CSR desk but available to chat.  Moreover, in the new engagement branch, it is likely that the senior might see an old friend checking out the new mobile banking app or make a new friend while attending a class on setting up alerts.  You might be shocked to learn that your older customers would embrace the changes I propose, not reject them.

Having said all that, would it be so hard to create a cozy nook in the re-imagined branch where a banker and a senior could sit in a comfy chair setting and have a conversation? Especially when you get rid of all of the furniture you currently have in the branch that supports transactions, none of which is actually needed anymore.

I also was interested to read about a new online banking startup called Charlie, which is specifically focused on serving customers 62 and older.  This is in stark contrast to the vast majority of Neobanks that seem to focus on younger customers exclusively.  According to a story in TechCrunch, Charlie is targeting customers who are retiring or retired with features that would be unique to this demographic.  Those 62 and older have spent an adult lifetime accumulating assets, and now they must switch to distribution mode.  With tools specifically targeting early access to social security payments and other related retirement planning tools, Charlie aims to focus on taking high net worth depositors from traditional banks.

Will Charlie’s senior focus cause serious defections from traditional banks? Perhaps. But all Neobanks suffer from the same issues, they have to have a real bank behind all of their services, which increases their costs. Plus, most seniors may be open to banking online, especially if their online access has features specifically tailored to them.  But to go full internet banking with no branch nearby?  Even millennials who state they would never go to a branch still tell pollsters that they want branch options available.  Come on, how is Charlie going to have a place to talk to Mrs. Jones who needs a reason to get out of the house?

A traditional bank will always have the advantage over an internet only Neobank. But if the traditional bank remains stuck in 1975 banking structure and methodologies, it is possible that there is a tipping point where the tailored features offered is enticing enough to convince a customer to “vote with their feet.”  The proper strategy is to carefully move forward with new methodologies and technology that is attractive for younger customers and work diligently to help older customers understand the benefits to them in adopting some format changes.  If done properly, with clear and open communication, I believe that the traditional bank of today can successfully transform into the bank of the future over the next two to five years, and then be setup for the next 30 years (today’s 32-year-old millennial will be 62).  Online banking Charlie will not likely still be around, but you could have someone named Charlie that is eager to engage with that customer in the branch conversation nook.  Or via virtual reality telepathy.

Hey, it could happen!