Helping seniors navigate the financial marketplace through the use of financial technology

By: Madeline Minnes and Tamar Saskin
University of Waterloo
Science and Business

Copyright © 2021 Madeline Minnes and Tamar Saskin. All rights reserved.

Background research

We chose to focus on navigating the financial marketplace as our research priority because the financial marketplace is becoming increasingly complex due to the increase in technology in society. Of those that struggle with navigating the financial markets, seniors, defined as individuals 65 and older, are especially at risk due to the rapid changes in how we interact with banking. As such, we chose seniors, or the elderly, as our target group. Specifically those who are healthy enough to take care of themselves and go about daily activities. Seniors who are extremely ill are often dependent on the care of others, and therefore are likely not taking care of their own financial responsibilities and will not be the ones navigating the financial market. Financial technology (FinTech) is of increasing importance when navigating the financial market place, as workplace automation and users serving themselves through applications becomes more prevalent. On the other hand, it also acts as a significant barrier for seniors, and as such it was chosen as the theme for this report (Review of Financial Literacy in Canada: An environmental Scan and Gap Analysis, 2020). FinTech includes online banking and mobile payment applications (see FCAC’s Financial applications (fintech apps) for more detail), the latter of which we focus on.

We started our research by assessing the number of seniors currently utilizing some form of technology. A study at UC San Diego found that in 2000, 14% of seniors were internet users and now 73% are (Jefferson, 2019). This same study found that 53% of people over 65 now use smartphones (Jefferson, 2019). Due to the rapid rise in technology and seniors buying smartphones, it is critical to educate seniors on how to use this technology so they can use it to their benefit and to help them complete financial transactions more efficiently, without worry of their privacy being breached.

Through research, an overall take away was that seniors possess a “if it ain’t broke, don’t fix it” mentality, which can explain the elderly’s population reluctance to change the status quo. Despite a high percentage of seniors using smartphones, laptops (>56%), desktop computers (>66%), and tablets (40%), only a small number of those users use their devices to “perform banking or financial transactions”, with the overall average less than 30% (Anderson, 2017). This speaks to the fact that possessing the technology is less of an issue, its using it for FinTech and other new purposes that is. This is supported by the results of an Oxford Internet Survey that found that 68 % of participants suggested it was easier to cope without using technology (Georgieva, n.d.). Change becomes more challenging with age, further establishing the “if it ain’t broke, don’t fix it” mentality. Focus groups as part of a study by UC San Diego explored the potential barriers elderly may have with technology. The study found that the elderly had low levels of financial literacy, as they did not understand the new FinTech terminology that is used today. The study at UC San Diego found that the elderly do not understand how this technology is working, and therefore they will not trust it with something so close to them like their financial assets (Jefferson, 2019). While there are often manuals and instructions for certain technologies, these manuals and instruction sheets are often written in “technology language” and therefore are still not helpful for seniors, or those without a technology background to understand them (Jefferson, 2019). Elderly in the study reported that they felt like a burden asking people to slow down and repeat instructions regarding how to use specific technologies (Jefferson, 2019). A 2015 PEW Research survey found that ⅓ of seniors have little or no confidence in their ability to use their electronics on their own (Berger & Kali, 2019). For the elderly to become comfortable using technology, they must be taught in a way that enables them to feel comfortable completing transactions independently, without the help of a bank teller or grandkid. The key for elderly to be comfortable using financial technology is for them to have trust in the technology, understand what the technology is doing, and how the technology can benefit them by helping them complete their financial transactions faster.

Next, the research found that seniors enjoy going to the bank, and reasons for choosing in-person banking over online options were linked to a need for human interaction, socializing and for “in person communication to preserve cognitive function” (Georgieva, n.d). Therefore, fully automating this process in every aspect is not ideal. It is important when designing FinTech software to understand the target customer and understand what seniors are looking for in a FinTech product so that the product can be customized to appeal to the elderly (Telus International, 2017). They enjoy the nice customer service they receive at the bank (Telus International, 2017). Additionally, the issue seniors have trusting FinTech, identified earlier as a key obstacle, could be more easily overcome if the technology's function was explained by those they trust, such as bank tellers or family members.

It is important to note the correlation between socio-economic status and FinTech, identified during our research (Berger & Kali, 2019). It was found that 81% of seniors with a household income of $75,000 or greater have smartphones (Berger & Kali, 2019). Almost 30% higher than the value attributed to the general population. When designing Fintech applications for the elderly, it is crucial to realize that it will only be accessible to seniors who have the appropriate technology to run these applications on. According to the Financial Health Network’s researchers, only 17% of low-to-moderate-income adults above the age of 50 are financially healthy (Eisenberg, 2020). Since many older people are not financially stable, their financial assets are critically important to them, for food and survival and therefore they do not want to take any chances of losing their assets through technology.

In 2017, the Consumer Financial Protection Bureau reported 3.5 million cases of fraud directed at those 70 to 79 (Berger & Kali, 2019). Elderly are unfortunately often targets of financial scams. For this reason, there have been numerous technologies invested to help elderly be aware of abnormal spending in their account. An example is the app “Eversafe”, which analyses financial behavior and spending and will alert you if abnormal activity has been detected (Orlov, 2019). This can help reduce the risk of fraud by alerting you prior to damage taking place. It is important to educate the elderly on applications that are designed to help them, so that they are aware of the advantages of using FinTech and the benefits it includes to help keep their financial assets safe.

Finally, there is a stereotype of the elderly being “technology illiterate”, which is discouraging to the elderly (Eisenberg, 2020). This is discouraging for learning purposes and makes the elderly feel isolated from this technology (Eisenberg, 2020). Elderly are worried about using technology for financial transactions due to the possibility of making a mistake, and in the case of financial technology, one mistake can cost seniors thousands of dollars (Eisenberg, 2020).

Research findings

Research methods

The main research method used was literature research (secondary research) from online articles and studies. The following were found to be the main reasons for the elderly not using financial technology: fear and lack of trust in this technology, lack of understanding how to use this technology, lack of human interaction in online banking and other financial technology tools, reluctance to change the status quo, and privacy worries including fraud and scams.

Research findings

From the background research, it was found that elderly have difficulty using technology in today’s society and are reluctant to use technology when it comes to their finances. The paper chose to focus on the elderly because the elderly population has been growing rapidly over the past few decades. According to the United Nations 2017 report, there is expected to be up to 2.4 billion people aged 60+ by 2050, compared to just 1 billion people aged 60+ in 2017 (United Nations, 2017). Due to advanced medical care and treatments, people are now living longer and therefore the elderly population is growing faster than before. As technology evolves and becomes more widely used all around the world, it is crucial to ensure that it is available and utilized by all age groups. Seniors struggle using technology because they did not grow up with it the way younger people did. The responsibility is on society to teach the seniors how to use technology and to design applications that will appeal to the elderly and help them in their day to day life. This paper focuses specifically on financial technology because research indicates that elderly are hesitant to use financial technology. However, many technologies can provide tremendous benefits for the elderly including online and mobile banking. Elderly often have a difficult time moving around, and being able to deposit a cheque from the comfort of their own homes can be extremely convenient. In order to engage the elderly with financial technology, it is crucial to first understand what the barriers are for using technology that seniors have.

Seniors are hesitant to use financial technology as they navigate through the financial marketplace due to a lack of knowledge regarding the technology available to them, fear of this technology, reluctance to change the status quo, and a lack of trust in regards to how this financial technology operates. This paper will focus on those who are above 65, and are healthy enough to take care of themselves and go about daily activities. Those who are extremely ill are often dependent on the care of others, and therefore are likely are not taking care of their own financial responsibilities and will not be the ones using financial technology. This report aims to analyze why seniors, defined as those 65 and older have difficulty navigating the financial marketplace. More specifically, this paper will address the use of financial technology (also referred to as “FinTech”) amongst the elderly population.

The following were found to be the main reasons for the elderly not using financial technology: fear and lack of trust in this technology, lack of understanding how to use this technology, lack of human interaction in online banking and other financial technology tools, reluctance to change the status quo, and privacy worries including fraud and scams.

Proposed solutions

Based on the problems identified as part of the research conducted, a two pronged solution is needed. The first component involves updating FinTech Apps, specifically ones used for banking, to be more user friendly. The second component involves addressing the issues of fear and lack of trust identified by having the banks themselves offer educational programs and in-person app support.

Banking apps

It was identified in our research that current banking applications are rarely tested on older target groups and as a result the apps continue to not meet the needs of older users. To overcome this problem we recommend the following changes be made by banks to their apps: enable users to pick the size of their text, don’t kick users off the app without warning, and highlight accessibility features (Designing for Accessibility, n.d.). While most phone operating systems allow the user to customize their text size, the majority of banking apps do not, compromising the ability of users with poor near vision to engage with content easily (Designing for Accessibility, n.d.). That means that users who use enlarged text on their phones experience an abrupt change in their ability to interact with their devices when trying to use banking apps. Along with adjusting text size, it is also important that designers pay attention to the line spacing and button sizing as that will also be impacted by the change in text size. Enabling these features will greatly impact older users' ability to engage with banking apps, making it easier to use the app and reducing their frustration and improving their overall experience. To address the second suggestion, banks should make sure there is a clear warning alerting the user that they will be kicked off soon, prior to it actually happening. This warning should include a “clear message, a countdown clock, and an option to cancel the timeout” (Designing for Accessibility, n.d.). Timeouts on banking apps are key for security, but those who take longer to complete tasks might be kicked out due to inactivity unexpectedly, which causes users to fear this happening. Fear is one of the key obstacles identified stopping older users from transitioning to online banking. While this fear has many causes, reducing this one source by including a warning will positively impact the user’s experience and make using the app less stressful. Finally, highlighting the features they have that promote accessibility, not limited to the suggestions made above, will make it easier for users to find and use. Eliminating sources of fear, and cases where such features aren’t used by those that could benefit from them due to a lack of awareness. Overall, these aspects of the proposed solution are especially practical as the changes would be very easy to implement while having a significant impact.

The other change proposed to make banking apps more accessible to older populations is for a “practice mode” feature to be created. Older people have more trouble remembering the steps to do something, so it being taught once often isn’t enough to give them the confidence to do it again perfectly in the future. This becomes an even bigger problem with online banking due to the added consequences and risk that exists if the wrong button is pressed, causing the fear felt. Our solution’s “practice mode” would be a feature that users could turn on, in a way that made it very obvious (ex. Colour scheme change, banner at the top of the app stating “practice mode”, etc.), see Figure 1, for an example. When “practice mode” is enabled users would be able to go about any of the normal app functions: sending an e-transfer to someone in your contact list, transferring money between accounts, adding a new contact to transfer to, pay a bill. So that all the steps are practiced, right through to pressing the send button, without the fear that you might press the wrong button or might send it by accident. Once “practice mode” is turned off, users can repeat the steps they’ve confirmed that are fresh in their heads to carry out an actual transaction.

In-person support

The second area of problems identified had to do with knowledge barriers, trust issues and the value of in-person interactions, so those are what this component of our solution aims to address. This solution takes advantage of the trust garnered by bank employees as “experts” in finance and their respective banks’ apps. As lack of trust is another key obstacle to seniors adopting FinTech that was discovered in our research, we propose that banks offer in-bank support for the app from their tellers or other trained professionals. If using technology is the problem, we must confront the reality that bridging the gap cannot rely solely on technology. While online tutorials, in-app practice, and intuitive app design will help, nothing is more valuable than in-person help for this demographic. While it is more costly to run individual help sessions, or sessions in smaller groups, they will be more effective than large workshops. Running larger workshops comes with many challenges, including extra ones specific to seniors (ex. Hearing and vision loss, need for extra help). Additionally, it would be easy for seniors to fall behind or lose track during the steps, meaning that extra resources would be needed to support them throughout. Including additional representatives from banks walking around during the workshop to help them with questions or problems. However, having representatives helping seniors during the workshop can be noisy and distracting to others around them, while not being entirely effective. For these reasons we believe that in person one on one support is the best method for educating seniors on financial technology. Moreover, the one-on-one sessions can have a higher impact combating fear and trust issues as they create a safe space for the seniors to ask questions without feeling embarrassed. As the training requirements for this part of the solution would be very minimal, it is a practical and actionable solution to have an impact on this issue.

Implementation

The implementation of the proposed solutions can be broken up into two stages: Short Term (3-6 months) and Long Term (6-18+ months). The ease of use updates to applications; enable users to pick the size of their text, don’t kick users off the app without warning, and highlight accessibility features, fall under this short term time frame. As it involves changing app software it will involve a development team and some level of testing prior to release, but on a much smaller scale than incorporating a new feature. The other solutions proposed; “practice mode” and in-person app support would require further refinement and implementation over a longer time frame.

“Practice mode”:

Development: A development team, consisting of software engineers and developers, would work to determine how to enable such a feature and then develop it. A design team will work in collaboration with the development team to refine the design of the User Interface (UI), so they can implement it. In particular, the design must address how to differentiate this mode from when the app is functional so that they are distinct and “practice mode” cannot be confused with the regular application. Additional consideration should be given to how eyesight deteriorates as people age, and what colours/characteristics provide the most contrast. This stage of development will involve alpha testing within the bank by the development team to test the internal structures and the functionality of the application.

Beta Testing: After alpha-testing, the new version of the app including “practice mode” will be rolled out to a small group of end-users. Problems/bugs identified in this stage will allow for further refinement of the app before it is released. It is recommended that the end-user group included in beta testing be composed of at least 50% users 65+ and the remainder consisting of a range of ages, languages and additional demographics.

Marketing: to raise awareness of the app's new features a combination of visual and word of mouth marketing using the tellers, along with senior communities, is recommended. Since the target market is seniors who are not as present on social media, online and social media marketing is not recommended.

Release: After all beta testing is conducted and the app is finalized, it will be released as part of an app update to all existing users.

In-person support:

Design: First the details of the set-up need to be answered, including the branding and promotion of this new offering. The following questions would need to be answered through further research with target user groups: where should it be offered within the bank? (at the teller stations vs. at its own booth), what should it be called? (avoiding terms that call out age or embarrass the target user), who will offer the support? (existing tellers or specifically trained staff?)

Training Staff: staff members that work in this capacity will need additional training on the following: the issues older people have with banking (fear, mistrust, lack of knowledge, cognitive limitations), sensitivity training, training about the app and its new features (if “practice mode” is implemented), where to direct them for more information specific to their needs. Depending on the anticipated number of seniors seeking help, banks can choose to train existing staff members or higher salaried employees specifically for this role.

Marketing: to raise awareness of the app's new features a combination of visual and word of mouth marketing using the tellers, along with senior communities, is recommended.

Roll Out: Start at main branches and branches that provide services to a concentrated population of people 65+ (ex. in large cities or retirement areas). Depending on the results of testing its effectiveness, roll it out to more branches (could have varying degrees of implementation for lower traffic branches). ;

Testing effectiveness

One way to test the effectiveness of the three solutions proposed once implemented is to try to determine a relationship between the increase in our target demographic (users 65+ years old) and the changes we have made. For the proposed changes to banking apps, this can be done by looking at the following pieces of data:

• Determine the number of new users who are 65+ (after each change is made) and compare it to the number of 65+ users prior to the implementation of each change.
• Determine the number of target users using the “practice mode” feature, and the frequency that they use it; once and then never again, a lot initially and then no longer using it, consistently. This could help inform when users are finding it helpful. For example, if it's only for a short period of time when they initially get the app, then that might be something to integrate into the initial introduction to the app.
• Determine the number of users younger than 65 using the “practice mode” feature. This will help determine if it is helpful and appeals to other demographics we didn’t anticipate. For example, perhaps those new to banking/youth find it helpful, which would inform future marketing efforts.

For the roll out of in-person app support, it would be valuable to look at the following pieces of data:

• Determine how many people are interacting with the in-person app support hubs. Is the traction in the branches anticipated? Or somewhere else? Or nowhere? This, along with looking at the number of new users 65+, could indicate how useful our solution is when implemented.
• Determine how many returning users of the in-person app support there are. If people keep on coming back, then their use of the in-person app support might just be replacing their trip to the teller, undermining the initiatives attempt to support seniors transitioning to online banking. The bank must then determine if the salary of the support staff is worth having more users using the banking app and customers feeling supported?

References

• Anderson, G. O. (2017). Technology Use and Attitudes Among Mid-Life and Older Americans. AARP.
• Berger, Y., & Kali, K. (2019). Issue Brief: FinTech and Older Adults. National Community Reinvestment Collection.
• Designing for accessibility: 4 overlooked features in mobile banking. (n.d.). Sensibill.
• Economic & Social Affairs: World Population Ageing. (2017). United Nations.
• Eisenberg, R. (2020). Hey, Personal Finance Apps: How about Serving Older People? Forbes.
• Fintech for the aging population: What to consider when developing more age-inclusive apps and customer service. (2017). Telus International.
• Georgieva, L. (n.d.). Digital Inclusion and the Elderly: Online Banking. School of Mathematical and Computer Sciences. Heriot Watt University.
• Jefferson, R. S. (2019). More Seniors are Embracing Technology. But Can They Use it? UCSD Researchers Suggest Asking Them. Forbes.
• Orlov, L. (2019). Five Fintech Offerings for Older Adults. Aging and Health Technology Watch.
• Review of Financial Literacy Research in Canada: An Environmental Scan and Gap Analysis. (2020). Government of Canada.

Appendix

Figure 1: A mockup of Practice Mode