Missed Opportunities for More Purposeful Fintech

The $8.3 trillion opportunity that most banks and startups are ignoring.

We have no lack of data in this digital era. With every step and every click, we are generating bytes and bytes of 1s and 0s, chronicling our every move. But how is data about customers being used — to actually help customers?

There seems to be no lack of argument supporting why banks need to target Gen-Z — the generation touted as the ​digital natives.​ Countless predictions abound for how Generation Z will reshape banking as we know it. Some even go as far as saying: “Forget millennials. Gen-Z is the future.”

But how true is that ​prediction​?And is it really a viable strategy to be so narrowly focused on an age group?

The Forgotten Generation

According to ​AARP, ​economic contributions from the 50-plus cohort represent 40 percent of the U.S. economy’s GDP. Estimated at $8.3 trillion, they are a driving force in the U.S. economy, “equivalent to the third-largest economy in the world”. So much so that, in 2018, the 50-plus population represented almost two-thirds of ​all​ spending on financial services and insurance.

With that in mind, one would ask, why aren’t we paying more attention to one of the largest and wealthiest growing demographics in the world?

Could it be ​bias​ — the outdated assumptions that “old people don’t use technology”? Countless VC and startup entrepreneurs have told me so. But despite the snickering, grandparents are coming to the rescue — via ​digital connections​ — as virtual tutors and playmates, while millions of households are self isolating.

Or could it be a lack of ​empathy?​ How many times do we need to see a replay of politicians who say that “old people need to sacrifice themselves for the well-being of the economy” in the face of COVID-19 lockdowns and recession? And how often do we just generalize the needs of “old people” — portraying them as a generation with diminished mental and physical abilities?

But it will be a mistake to look at the older population as a homogeneous group — let alone a dispensable population. We all live our lives differently — and the solutions that we need to support us are therefore different, regardless of our age. The life that we now lead is drastically different than those of our parents or grandparents when “they were our age”. More people are starting businesses, with more than half of new entrepreneurs in the U.S. aged 45 and above. Most of us are working longer — and actively staying engaged pastretirement.​

Since the early 1900s, we have added an extra 30 years of living. With more people living healthier and more productive lives, life stage matters more than the number of candles on our birthday cake.

At a major conference last year, someone approached me and asked: “Why is it important to do anything for these​ people, if I already have their money in the bank?”

That’s a million dollar question. Quite literally.

Missed Opportunities

Increasingly, we are living and working alongside multiple generations. According to ​Pew Research Center,​ a record 64 million Americans (1 in 5) live in multigenerational households. More people are now living long enough to see their great grandchildren — by 2030, more than 70 percent of the U.S. 8-year-olds will have a living great-grandparent.

Naturally, our financial lives can become quite complex with longevity; in addition to planning for our own retirement and our kids' education, we are more likely to be taking care of our parents’ and loved ones’ financial well-being.

But with challenges come opportunities.

When life expectancy reaches 100 and above, is it still reasonable to expect that ​everyone​ aged 50 and above have the same needs and wants? And when age is no longer a meaningful way to segment the market, how can we best serve this forgotten​ demographic?

Emerging Technologies are Age Agnostic

While much of the development of artificial intelligence in the financial services sector is centered on wealth management, the conversations are typically focused on leveraging technology to attract younger demographics. Think for a moment: when was the last time you saw older faces or multiple generations featured in fintech marketing?

But technology is age agnostic. The same solution that is ​designed​ to help millennials figure out their finances can be used to help sandwiched generations plan for finances between multiple households. The same behavioral economics principles that nudge consumers to take the proper actions towards a more secure financial future can be employed for a wide spectrum of audiences, regardless of age. There is no reason why saving is only limited to a particular age group.

And here are a few less discussed but important facts around caregiving, a growing reality that comes with longevity. A quarter of family caregivers are millennials, and the typical​ family caregiver is a 49 year-old female. While many of these family caregivers provide financial caregiving to their loved ones, most are thrust into crisis and have not properly planned for it. And as we have learned through the recent pandemic, when you are in a crisis mode, you simply won’t have the time to look for help.

Hence it is more important than ever to customize financial planning based on life events, health, and aspirations; and the algorithms should be dynamic and adaptive to changing societal and market conditions. Ample opportunities exist for financial advisors and wealth management firms to provide more personalized services for women, many of them caregivers, who tend to have less assets and longer life expectancy.

Aside from asset accumulation, with more consumers adopting digital banking, much more needs to be done to protect older adults from financial exploitation. Scammers tend to prey on people who are lonely — and older consumers are often targeted due to their relative wealth. With proper training, and better intervention and prevention strategies, financial institutions can play the crucial role of being a true guardian for their customers and their families.

Planning for Retirement and the Next Generation

“Can I afford to retire?”

A simple yet complex question — especially for the many near-retirees who don’t have their own financial advisors, but are looking for the best strategy in drawing down their assets. With increased longevity and a more complex web of dependencies, static planning worksheets no longer suffice.

But once again, this is where emerging technologies can help.

Algorithms and data analytics can be employed to help older adults understand how much longer they would need to work, or if they have sufficient funds to help with their grandchildren’s college tuition. According to an AARP survey, 21 percent of grandparents consider themselves as a financial supporter of their grandchildren — regardless of whether or not they can afford it.

The unfortunate reality is that college debt is not just a ​millennial​ problem as many would have thought; the fastest growing group of student loan borrowers are older adults. Those aged 60 to 69 owe $85.4 billion in student debt. It is no wonder more people are delaying retirement, falling into poverty in later years, or are relying on family members to sustain a living.

Technology — With a Purpose

Instead of creating yet another budgeting app with shiny new UI — we have the know-how and the technology to create something truly meaningful; something that can impact the wellbeing of not just one, but multiple generations.

It is time to imagine a different future, one where people of all ages can thrive. Older adults are a driving force in our economy, and their collective wisdom and life experiences are vital to our society at large. As Paul Irving, Chairman of the Milken Institute Center for the Future of Aging, often says: “older adults are the only growing natural resources in the world.”

It is time to shed our bias, reject the ageist stereotypes, and realize the opportunities that come with living longer. It is time to put our heart back into our ecosystem — and build what matters.

It is time for a fresh start — for fintech — and beyond.

The future of aging should not be a story of survival — but one of living.

Additional Reading:

  • This is a recurring topic at Fintech Takes. An earlier newsletter, What’s Old is New Again, also looks at the business case for fintech focused on 50-plus cohort.

  • Paul Irving, whom I quote above, is worth following on Twitter if you don’t already.

  • I’d also recommend Professor Andrew Scott from the UK. The book he wrote with Lynda Gratton (The 100 Year Life) absolutely turned my life upside down.


Theodora Lau

Founder, Unconventional Ventures