The FCA stance on communicating with older consumers: implications for Marketing

The Financial Conduct Authority (FCA) recently issued a discussion paper on the Ageing Population and Financial Services. The paper raises points for debate on how the financial sector approaches – and should approach – the ageing UK population. Are current products and services meeting the needs of a changing demographic; how should providers respond to an ageing market?

Much of the discussion paper focuses on operational issues, covering matters like:

  • How can we stop pensioners from underestimating their longevity and running out of money?
  • Understanding the financial capability of older consumers
  • What are the barriers to retirement income adequacy in an ageing society
  • How well do financial products and services meet the needs of older consumers?

Each section is written by an author from the financial services sector; contributors include the British Bankers’ Association, the Pensions Policy Institute and Which?. 

How does the paper affect financial services marketing?

The section that will be most relevant to financial services marketers is titled ‘How can firms ensure that their channels of communication adapt to meet the needs of older consumers?’.

Written by Eric Leenders, the Managing Director, Retail and Commercial Banking at the British Bankers’ Association, it looks at what’s needed to communicate effectively with an ageing UK population.

Leenders recognises that financial services marketing and communications are undergoing rapid change; emerging technologies provide near-constant new ways to communicate with consumers. He says that ‘there is a balance to strike between providing the right needs-based support and avoiding making wholesale or stereotypical assumptions about capability, or circumstances, based on people’s age.’

In other words, financial services marketers need to deliver communications in an appropriate way, and this appropriateness needs to be determined based on fact, not on supposition about how a segment of the population might want to be talked to.

Digital marketing communications

The paper quotes the FCA’s own research, which showed that older customers who use mobile and internet banking typically use them as frequently or only slightly less often than younger generations.

The research also found that:

  • Nearly 2.3 million customers aged over 70 are now registered to use internet banking; more than 600,000 of these people are 80+.
  • There have been over 457,000 downloads of banking apps which allow users to safely pay bills, transfer money and read account statements by customers aged 60 or over. Nearly 20,000 of these customers are 80+.
  • More than 300,000 customers of UK banks aged 60+ have signed up to receive text alerts from their bank, which can help customers avoid fees when breaching borrowing limits.

We need to be careful, therefore, about speculating around how older consumers want to be communicated with. Financial services marketers need to be mindful of their preferences – but these preferences may not always be the ones they expect.

Mirroring innovation in other sectors

Leenders suggests that financial services marketing could learn from retail and other sectors, where biometric security – already incorporated in some banking apps – can minimise the need to remember passwords or codes; a pain for any user, not just the older ones!

More futuristic developments – like the use of wristbands that use the unique electronic signals sent out by people’s hearts to confirm the customer’s identity – are also being piloted and have potential for older (and all other) consumers.

Combining digital with ‘real life’

The paper recognises that while, in many cases, digital will be the most popular communications option, for others, ‘real people’ are still the preference. This can be particularly the case, it says, amongst the ‘oldest old’ population. Some customers will just never be ready for digital or won’t have the technology needed to take a digital approach.

Although banks have been scaling back their physical presence, there are ways that digital and high-street banking can complement each other.  Banks are increasingly using videos to allow customers to talk to staff face-to-face remotely. Videos and other graphical devices are also being used to convey information more clearly and simply. Some video conferencing services are being developed that enable older users to ‘patch in’ advisers, friends and/or family, to help with financial conversations and decisions.

Vulnerability

The paper also looks at the issue of vulnerability – pointing out that although it’s wrong to assume that all elderly people are inherently vulnerable, it must be appreciated that vulnerability does increase with age, and that issues such as failing eyesight, disability or care requirements can impact consumers’ ability to make decisions.

This also affects communications – whether it’s the basics, like providing bank statements or key facts documents in large print or Braille, or more innovative provision, such as cheque imaging technology or video conferencing for mortgage applications.

What happens next?

The period for responding to the paper closed on 15 April 2016, but if you would still like to comment on the issues raised, you can get in touch with the project team on dp16-01@fca.org.uk

The information gathered will be used to help the FCA to prioritise a programme of work looking specifically at the ageing population. Further research will be carried out in the second quarter of 2016 to inform this programme.

Ultimately, the regulator is planning to develop a Strategy on the Ageing Population, due for launch in 2017.

What does all this mean for financial services marketers?

Ultimately, the ageing population will – and should – influence the way we market financial services. The changing UK demographic will impact the work of financial services marketing teams. Ensuring everyone is communicated with in a way that is effective and appropriate is key, not only to good outcomes for consumers but to effective marketing campaigns for financial services firms.  This is a basic tenet of good marketing practice, and applies to the wider market as much as it does to older consumers.

The communications section in the FCA’s paper concludes by saying:

‘An ageing UK population may very well lead to further opportunities to engage with older consumers; not everyone will want to harness new services, but it’s vital that no one feels excluded from easy-to-use technology, and that banks continue to give all the support they can to those who want to learn how to join.’

Any financial services firm that bears this in mind in its future marketing and communications looks set for success.

Communicating with an ageing population is just one strand of the FCA’s focus on fair treatment for all customers. If you want to learn more about the FCA’s current approach to Treating Customers Fairly, you can read Perivan Solutions Treating Customers Fairly FAQs.

Free to download and you can get your copy here.

Author: Steve Coleman – Perivan Solutions