What's Old is New Again

Older consumers deserve fintech too. Metal credit cards are still cool.

The kids are alright…seriously, they’re fine…stop focusing on them so much.

Disruption, in any industry, is inexorably linked to young consumers. The reasons for this are myriad. Young consumers aren’t set in their ways. They’re natively familiar with emerging technologies. They’re almost reflexively opposed to using the same service providers and platforms as their parents.

To a certain extent, this makes sense. These attributes do make younger consumers an excellent target market for innovative new products and services.

However, at a certain point, the focus on understanding the needs and preferences of younger consumers can turn into an obsession that can lead marketers and product designers into trouble.

On a related note:

Gen Z particularly prefers tech, entertainment, and food brands, which outperformed other categories. Following Google, the most popular companies included Netflix, YouTube, Amazon, and Oreo.

This data — from a brand affinity survey conducted by Morning Consult — made me seriously consider writing a blog titled “What Banks can Learn from Oreo in the Battle for Gen Z”. I guarantee, it would have gotten clicks.

This research on Gen Z brand preferences tells me two things:

  1. Today’s 18-21 year olds are motivated by the same exact same temptations that ensnared the young adults of previous generations.

    hungry winnie the pooh GIF

  2. The fact that multiple publications found this (completely unsurprising) data newsworthy means that our obsession with understanding the minds of young adults (whose minds aren’t even done developing) has gone too far.

Meanwhile, here are a few interesting (and under-reported) facts you may or may not know.

Older consumers have money (gasp!)

Americans over the age of 50 have the highest net worth of any other population segment. The prospects for future spending also look bright; over the next 20 years, spending by those over 50 years of age is expected to increase by 58% to $4.74 trillion vs. growth of 24% to $3.53 trillion for those 25-50 years old. In addition, Boomers control more in financial assets, as half of them hold over $100,000 in investments and savings, versus 37% of Gen Xers and 14% of Millennials. Boomers also stand to inherit $15 trillion from their parents (the Silent and Greatest Generations) in the next 20 years.

And they are working longer.

the number of 65-69 year olds in the labor force is around 5.5 million, which is almost double compared to a decade earlier and almost three times as much as 20 years ago.

Perhaps because they can’t afford to retire.

Nearly half of U.S. households aged 55 and over have no retirement savings, according to a report by the Government Accountability Office.

one in three people approaching retirement age believe they are more likely to learn that Bigfoot exists than they are to save enough to retire comfortably, according to a survey conducted by AARP and the Ad Council.

And Social Security won’t cover the difference.

although more than half of Boomers expect Social Security to be a major source of retirement income — up from 43% in 2014 — under current trends, the reserves will be depleted in 2034 and scheduled tax income will only be sufficient to pay about three quarters of scheduled benefits.

Nor will pensions.

Many employers no longer offer traditional pensions the way they used to — in fact, less than 5% of Fortune 500 companies offer pensions to employees today, in comparison with 50% two decades ago.

But wait, it gets worse! Financial scams targeting the elderly are rampant.

The Consumer Financial Protection Bureau estimates that in 2017 seniors experienced 3.5 million incidents of financial exploitation, including fraud perpetrated by strangers or theft by caregivers and family members. Adults ages 70 to 79 are estimated to have lost an average of $43,300 in each reported case of financial abuse.

And these challenges impact younger generations as well.

Twenty-five percent of millennials and 50% of Generation X members are caregivers for older family members

Thankfully, we are starting to see an increase in financial technology innovation and investment focused on addressing the unique challenges faced by older consumers. This graphic from a recent CB Insights report provides a great overview:

That said, we still have a long way to go to improve financial outcomes for consumers over the age of 50. And until we make significant progress on this front, I really don’t want to read another headline about college students’ favorite munchies.

Additional Reading

  • Follow Theo Lau (@psb_dc) at Unconventional Ventures (@UnconventionVc), if you don’t already. She has been focused on this problem for a long time:

    About two years ago, Lau was talking to a fintech’s founders about their product. She asked if it was something adult children could use with their parents (Lau formerly led innovation at AARP). “Ten minutes into the conversation, the product person said, ‘Our product is not for old people,’ ” Lau said. Bankers have told her the same thing.

  • Today, roughly the same portion of Boomers manage their checking accounts in digital channels as Millennials. If the pattern established when parents followed their children to Facebook holds, we should see digital banking usage by Millennials and Gen Z plummet in the next few years.

  • Challenger banks in the UK are looking at older cohorts (and other segments left behind by fintechs and traditional banks) as a key area of growth. And Goldman Sachs’ Marcus has formed a new partnership to go after “the genteel world of the British retiree”.

  • For an informative (and depressing) look at financial abuse of elders, listen to the latest episode of John Heltman’s (@JohnHeltman) excellent podcast Bankshot (@BankshotPod).

  • And if you’re looking for a broader overview of the challenges facing older consumers and the opportunities available for companies that solve them, I’d highly recommend Fast Company’s series The New Business of Growing Old.

The Clank Effect

In 1999, American Express introduced a black credit card made out of titanium. It was available, only by invitation, to extremely wealthy consumers. It came with a dedicated concierge, travel agent, personal shoppers, and no preset spending limit (the largest confirmed purchase on an Amex Black Card was $170 million).

In 2019, Apple and Goldman Sachs introduced a white credit card made out of titanium. It’s seemingly available to almost anyone who applies for it and it comes with 1-3% cash back, a fancy mobile interface, and no annual fee.

In almost every way, these cards are polar opposites. And yet — over the past 20 years — the one thing they have in common has come to increasingly instantiate the idea of differentiation in the credit card space.

Whether it’s the Chase Sapphire Preferred Card (which was so popular when it was introduced in 2016 that they temporarily ran out of cards) or the myriad of cards being rolled out by European challenger banks; the overall design trend is clear: metal is still cool.

Additional Reading

  • Here is the positive take on metal credit cards, from Lloyd Blander (Creative Director at Siegel+Gale)

    the experience of actually holding one in your hand is pretty cool. The cool touch and weight of the card itself actually makes the card feel quite substantial and throwing one down at dinner produces an audible sound that industry insiders call the ‘clank effect.’

  • And here is the (very) negative take, from Max Tatton-Brown (Managing Director of Augur Communications)

    Metal cards are macho bullshit. As a marketer, I'd probably say that card design is something that has been used by banks to get people's attention and semi communicate a premium nature for years. Outside the anachronistic, backward card culture of North America, it flies in the face of a more enlightened direction for contactless payments through devices. I want to carry as few cards as possible

  • A potpourri of fun stories on credit card design and aesthetics from The Points Guy:

  • And speaking of the Apple credit card — depending on who you ask, it is either revolutionizing the payments industry or simply using the Apple marketing machine to make popular payments trends (mobile wallets, metal cards, etc.) look revolutionary.

    My quick take—it’s a credit card with a vastly superior digital onboarding process and an apparent disinterest in revenue (at least in the way issuers’ have traditionally thought about it). Looking for other informed opinions? I’d recommend @AaronSuplizio, @sarkis__, and @CharleyMa. Also, this recent WSJ article on Goldman Sachs’ Marcus has some interesting insights.

Homework

Credit cards and payment cards are arguably the most valuable network in the world, with at least $1T of publicly traded market cap (Visa, MasterCard, the banks who issue them, etc)...all starting off in a little town called Fresno, on a random day in September of 1958.

I guarantee you’ll learn something new from Alex Rampell’s (@arampell) excellent thread on the history of the credit card:

Thanks,

Alex Johnson

(@AlexH_Johnson)

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