Leveraging Tech to Improve Financial Inclusion
Financial inclusion is a favorite cause in the financial services industry.
Society likes to tease that the baby boomer generation (born 1946–1964) is light-years behind younger generations, especially when it comes to technology adoption. But the portrayal of boomers as an analog generation is outdated.
Baby boomers support digital innovation more than society gives them credit for. Yet they’re the most undermarketed-to generation, behind the silent generation (those between 75 and 92 years old). The truth is that they have money to spend, and much of that spending power lies in the hands of digital channels.
A 2020 report by Mobiquity explored baby-boomer engagement with digital technology. What they found was that, similar to businesses that were forced to take operations online, boomers took their business online due to safety advantages when COVID-19 hit.
The pandemic increased tech adoption among older generations, but adoption was already trending upward before COVID-19 forced many businesses online. Pew Research Center data from 2019 shows that the majority of baby boomers now own a smartphone (68 percent,) and 11 percent of them use their phone as the primary way to go online. They also use social media—especially Facebook, where they’ve doubled their usage since 2015. One could argue that the digital adoption of smartphones is a necessity, but growth in social media usage demonstrates the opposite.
Boomer consumers are growing increasingly comfortable with digital options. Eighty-five percent of boomers in one study said they wished more businesses had digital options. Pair that with the buy-online boom caused by COVID-19, and baby boomers have come to not only want but also expect digital offerings from their favorite businesses.
More businesses in essential categories (like grocery stores, pharmacies, and health care) have shifted their services online for the first time due to the pandemic. Telehealth use among baby boomers increased from 10 to 48 percent after the onset of COVID-19, and more local pharmacies started offering online ordering, delivery and pickup to compete with online pharmacies like Amazon Pharmacy. Online grocery pickup also increased by 431 percent, and Apptopia found that grocery delivery apps—like Instacart, Walmart Grocery and Shipt—“have seen surges of 218%, 160%, and 124% respectively.” This behavior is expected to continue after COVID-19 slows; ensuring that your website or app can keep up with demand is key.
A National Retail Federation (NRF) study found that two-thirds of baby boomers had tried buy online, pick up in store (BOPIS) offerings. Of those, “63 percent said it improved their overall shopping experience.”
Boomers also love curbside pickup options because they help avoid shipping costs and facilitate COVID-19 precautions (like social distancing and shelter-in-place restrictions). So, even after social distancing measures slow, the cost savings alone will motivate that behavior to continue. To ensure that your business can handle BOPIS and curbside pickup, make sure you have the infrastructure in place to execute it flawlessly (and partner with a third-party provider if you don’t).
Although the medium has changed (from in-person to digital), baby boomers are taking their tried-and-true expectations to digital means. So businesses should focus on enabling and optimizing the experience of those digital solutions.
Coupons, loyalty programs and other incentives remain popular among this age group—all things that are easy to optimize for digital with a fully integrated point-of-sale (POS) or mobile POS (mPOS) system. Boomers also started using chatbots, apps and websites to interact with their financial institutions—Mobiquity’s survey saw a 9 percent increase in usage—so businesses should take more support efforts online, especially on mobile, to meet that need.
Where there’s wealth, there’s a need for financial services. One in five baby boomers plans to continue to work at least part time during retirement, and 32 percent of boomers are doing so for the discretionary income. And by 2029, when the youngest boomer turns 65, the generation’s financial assets will reach $26 trillion, up from $17 trillion in 2015, according to Deloitte.
Changes to employment and lifestyle have a direct effect on consumers’ income and spending. As boomers continue to work for discretionary income and adopt more digital solutions, financial institutions will need to continue to cater to their digital needs. Financial institutions can meet those needs by rationalizing their offerings, like taking loan applications online and optimizing and encouraging your mobile banking app(s). Discover how Bay Federal enhanced their customer experience by building a digital banking app around their users.
Baby boomers may be entering their golden years (ages 65+), but studies show they’ll remain in the workforce longer than the generations that preceded them. And they’re holding on to that purchase power for as long as they can.
According to Visa, “the strongest future growth potential in spending lies firmly with baby boomers.” Boomers don’t make as many purchases as younger generations, but they’re still the biggest annual spenders. According to Epsilon research, boomers have an annual spend of $548.1B, not-so-closely trailed by Gen X, with $357B.
On top of general spending patterns—and although millennials and Gen Zers do have money to spend—baby boomers have the most disposable income of any generation. Visa’s report says that over half of U.S. spending comes from those 50 and older, and that they are “responsible for more spending growth over the past decade than any other generation, including the coveted millennials.”
One of the reasons boomers hold their place in the market? They’re still working, and they don’t plan on stopping anytime soon. Baby boomers are the only generation with upward trending growth in the labor force.
Whether it’s out of necessity or want, baby boomers’ digital adoption continues to increase as they hold on to their purchase power and intent—and as an undermarketed-to generation, businesses have plenty of room to capture it.
Businesses heap attention on millennials and Gen Zers like they’re Molly Ringwald in a coming-of-age film by John Hughes.
The strategy makes sense—millennials are the largest generation since the baby boom, and Gen Zers aren’t far behind.
But the shiny new demographics that have caught the eyes of businesses are missing an important ingredient: buying power.
The media may have to apologize to the supposed slackers born between 1965 and 1980 because they have now entered the prime of their careers, and they have the salaries and the wealth to prove it.
Businesses neglect Gen X at their peril because it’s a generation with a lot of buying power and a lot of influence on increasingly common multigenerational households. Appealing to the “Forgotten Generation” is all about offering value and practicality and communicating in the right channel.
Gen X is kind of like the middle child lost in the mix between two huge population booms—baby boomers and millennials.
Although baby boomers number almost 71 million people, and millennials account for a hair more than 72 million people, Gen X still comprises a healthy 19.4 percent of the population with 65 million consumers, according to the U.S. Census Bureau.
And Gen X households also earn more than other generations, to the tune of $113,455. Gen Xers hold almost 29 percent of the country’s household wealth, with an average net worth of $168,600. This reflects a generation reaching the peak of their careers.
Gen Xers are conscientious spenders, which makes sense because of the era of economic turmoil they’ve seen in their lifetimes.
Elder Gen Xers were kids at the onset of the energy crisis of the 1970s. Then Black Monday sent the stock market tumbling in the late ’80s. After that came the dot-com bust and the Great Recession.
It’s understandable that this is a generation that values a good deal. Businesses can best serve Gen X by offering bargains and great value on products and services.
Just because they are bargain hunters doesn’t mean Gen Xers aren’t willing to spend, however. While the average U.S. household spends $63,036 per year, households led by Gen Xers spend $76,788 annually.
To unlock that buying power, try coupons and loyalty programs. eMarketer says 86 percent of Gen X will try a new brand if offered a coupon, and Quad, an analytics firm, notes 82 percent of Gen Xers are in loyalty programs.
Once you do earn their trust, Gen Xers are more loyal to brands than their fickle children and grandchildren. Marketing experts show two-thirds of Generation X will continue buying from a brand they like; compare that to just half of millennials and Gen Zers.
The children of the ’70s and ’80s came of age during a time of titanic change in U.S. family dynamics. Mothers were pouring into the workforce at unprecedented rates. At the same time, divorce rates peaked.
These changes led to the nation’s first generation of latchkey kids—youngsters who often came home after school and took care of themselves without adult supervision until their parents returned from work.
The result? A generation that prides itself on independence and self-reliance. For retailers, that means understanding Generation X is not just going to blindly trust what they find on your sales page. This demographic is not impressed by hype, so businesses are advised to skip the slick branding and forget about the fluff and flourishes associated with a product. Gen Xers are only interested in how a product or service is going to solve their problem.
They are more likely than other generations to deeply research a product before they purchase, so offering them lots of information about the benefits of your product is vital to earning their trust.
Gen Xers tend to research before they buy at higher rates than other generations; 50 percent take this step, according to retail industry experts. Like younger generations, much of that research happens online. They won’t look for that information just on your website, though. Gen X shoppers are looking at what their peers think about a product before they test the waters themselves.
It’s a lot of work to provide the information and assurances Gen Xers need to be comfortable with your brand, but the effort can pay back not just with Gen Xers. This generation is at the forefront of a trend where multiple generations live under the same roof. That means Gen Xers who are supporting children and parents also have influence over purchases made by the generations both younger and older than them.
Gen Xers were born into a world of rotary phones and cassette tapes but came of age in a world dominated by the personal computer.
The upshot was a cohort comfortable straddling the physical and digital commerce experience. That means businesses must offer both to close the sale with Gen X buyers.
Gen X is more engaged with brands throughout their customer journey compared to other generations. They are more likely than other generations to respond to email marketing, especially if it comes with a good deal. And don’t discount social media, where Facebook still reigns. More than three-quarters of Gen X are still Facebook users.
While Gen Xers may research online and be comfortable engaging with brands digitally, they are still buying in-store. A whopping 82 percent of them purchase something in a physical store on a monthly basis.
Brands willing to accommodate Gen X in their marketing efforts can expect to attract a generation of consumers at the height of their buying powers.
If you want to attract the deep wallets of America’s forgotten generation, it would be wise to create loyalty programs with great rewards that can be used seamlessly in-store or online, cut through the noise with humorous advertising and get straight to the point to show the benefits of your products and services.
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