The evolution of finance is intergenerational

Jeremy Altman, VP – Strategy & Planning

The industry is awash with information about what Millennials want and what businesses can do to retain their loyalty in an increasingly competitive marketplace — especially in industries like ours, where emerging technology is seen as the domain of, digital natives or, Millennials who grew up with mobile technology. This market segment are digitally sophisticated and, consequently, much more receptive to digital financial technologies than prior generations. In fact, for a portion of them, being the first to use a new technology or having the latest smartphone is a point of pride and a way to stand out in their peer group. 

Not only are they influential, they’re also a large market. Globally, there are now more Millennials than any other generation and next year, they’re set to overtake Baby Boomers in spending power.

But, as companies work harder to attract Millennials, where does this leave the rest? Do mobile wallets and other financial technologies do enough to appeal to the sensibilities and financial needs of older consumers? Or, is this section of the market being increasingly left out of the conversation?

Generation X: the forgotten market

Based on the book by Douglas Coupland, Generation X described the lives of disenfranchised young people, and eventually became a term used to describe the consumer youth market of the 1990s. The Pew Research Centre once called Generation X – those born between 1965 and 1980 –‘America’s neglected middle child’. This concept can be extended to other parts of the Western world. Sandwiched between Baby Boomers and Milllenials, two larger and limelight-hogging generations, they’ve been mostly overlooked by brands, including financial services providers.  

Generation X, or “Gen X”, grew up in the very early days of digital technology, and are relatively tech savvy. They’ve always used ATMs and were among the first to use the internet. And, at least in the US, 83% of them own a smartphone. Like their Millennial counterparts, they also appreciate the speed and convenience of mobile payments and the chance they give them to earn rewards.

So, why do they lag behind when it comes to the uptake of mobile wallets and other digital payments technologies?

Understanding Gen X: experiences, attitudes and problems

Gen X faced two recessions in their early adulthood: the early 2000s recession and the 2008 financial crisis. The latter hit many Gen Xers particularly hard. Having bought their homes at the height of the property bubble, they suddenly found themselves paying overvalued mortgages in addition to losing their jobs. As the crisis unfolded, and its cause was revealed to be rampant speculation by banks, it fostered distrust, even outright hatred of the financial establishment.

Gen Xers also tend to have more expenses and higher levels of debt. According to a UK study, they have a bigger weekly spend than either Millennials or Baby Boomers. In the US, they similarly tend to have more credit card and other debt compared to their younger and older counterparts. 

How do you make fintech more attractive to Gen Xers?

Gen Xers seem to have two main sticking points: they distrust the financial industry and they have more debt. Consequently then, they have different financial priorities compared to Millennials and Baby Boomers.

Fintech companies are uniquely placed to address the issue of lack of trust. Having filled the vacuum left by banks and other financial institutions in the wake of the 2008 crisis, many fintechs are based on the premise that they can make finances simpler, better and safer for everyone. This push towards disruption of the status quo should be very appealing to Gen Xers, because it matches their own expectations of what needs to change in the financial industry.

Transparency and education also play an important role in garnering trust. Demystifying finance by making it easy to understand how it works empowers people, making them feel they have more control. Products such as paysafecard, which can help control spending, also reinforce the idea of security and serve as a bridge between analog and digital finance. 

Additionally, Gen Xers are a bit set in their ways, this means that fintechs have to work harder to develop their proposition for this generation, since they might not value or comprehend the full benefits of using digital cash. 

Baby Boomers: a lost cause?

The second largest market after Millennials, Baby Boomers are often considered their polar opposite. Born between 1946 and 1964, they had to get to grips with digital quite late in life. For this reason, they’re less technologically sophisticated. Uptake of new technologies has been slow: only 53% currently have a smartphone compared to 83% of Gen Xers and 90% of Millennials. 

Of course, this doesn’t mean Baby Boomers are technologically illiterate. For one, they were the first generation to see the introduction of computers in daily life and to experience the radical changes this brought about.  

More to the point, Baby Boomers are becoming increasingly connected. For instance, a study carried out way back in 2014 found that Baby Boomers loved using online banking, busting the myth that fintech is only attractive to younger consumers. Digitally engaged Baby Boomers, or “Silver Surfers” also tend to spend a lot of money online. Not only do they shop and book holidays for themselves, they also buy gifts for their close family and friends. 

So, why is product adoption among Silver Surfers still low?

Well, the main problem seems to be that like their Gen X counterparts, they also tend to be fairly set in their ways. Interestingly, the Pew Research Centre found that trust in technology is less of an issue for Baby Boomers than it is for Millennials. But, even so, 43% don’t use mobile payments simply because they prefer to pay in cash. 

In other words, Baby Boomers mostly don’t feel a pressing need to change their habits or routines. The payment methods they currently use are working just fine for them, so they need to be persuaded to try new technologies. This is not unchartered territory, social network Facebook found a rise in Silver Surfer uptake, due in a large part to grandparents who use it as a way to stay in touch with children and grandchildren who live away from the family home.

Baby Boomers, fintech and the power of persuasion

Rewards programmes are often touted as the thing that’ll make mobile wallets and other payment technologies really take off. However, research suggests that, while Baby Boomers do like rewards, they tend to prefer value, superior customer service and ease of use

The latter is especially important because Baby Boomers aren’t usually as comfortable with digital technology as their younger counterparts. Indeed, technology in and of itself is never going to be a selling point for them.  

More significantly, the importance of product knowledge cannot be discounted. 

Many Baby Boomers are still unaware of benefits such as lower charges or even the speed of mobile payments. Taking the time to educate them about these and other advantages will encourage more consumers to give the technology a try. 

Final thoughts

As more time passes, tech-savvy Millennials will slowly but surely become the dominant consumer group. This is inevitable. Even Millennials will eventually be replaced by younger, more trend-conscious generations. 

That said, this doesn’t mean we should forget about Gen Xers and Baby Boomers. Older generations remain a significant market, at least in the short to medium term. Indeed, the last Baby Boomers will turn 65 in 2029, while the last Gen Xers will do so even later: in 2045.

Clearly, we need to stay mindful of each generation’s quirks and unique attitudes to technology and finance. By jumping on the Millennial bandwagon to the exclusion of the rest of the market, we risk stunting the evolution of finance instead of making it simpler, more accessible and more relevant for everyone. Let’s make fintech products and solutions more accessible and appealing to all generations. This will boost adoption and help close the digital divide. Not only will such an approach boost the adoption of digital solution, but it’ll ensure that nobody gets left behind. Surely, moving forward together is an ambition worth striving for and constitutes a greater aspiration for the Fintech community.






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