Written by Madeline K. Aufseeser and Ron Mazursky, PayGility Advisors based on data from consumer research by Phase 5.
When the 2020 pandemic started, the financial services industry hoped that emerging personal health concerns would be the tipping point for consumer mass adoption of online and mobile banking solutions. That dream has come true for some segments of the market. Yet, even during the pandemic, digital banking product adoption and service usage remain shaped by demographics including age. As the pandemic rages on, U.S. consumers over 55 years of age are still less likely to adopt or use digital banking services than consumers age 18-54.
Be it online banking, paying bills online, using P2P services, or using mobile wallets at the POS, older consumers continue to be less likely to use these services than consumers under age 55. 14% of consumers 55 and up still Do NOT use online banking services compared to 8% of consumers age 18-54. Three times more people age 18-54 use a mobile banking app than consumers over 55.
Additionally, more younger consumers started using digital services during the pandemic than older consumers. 23% more younger consumers started shopping online and almost four times as many younger consumers started or are using more P2P services to send or receive money subsequent to the pandemic. Consumers under 55 reduced using cash by 11% more than older Americans. The survey data plainly reveals how the digital divide still exists among older and younger age groups and how some older consumers are still daunted by digital solutions.
Financial service companies should recognize the potential implications from the digital divide. There is no doubt that financial services organizations must continue to digitize services and consumer facing solutions while at the same time be mindful of those consumers who still elect not to engage. Digital strategies and services should be looked at as one more form factor that consumers may choose or not to adopt and use. Incentive pricing or trying to educate the older segments may not yield the desired results. As such, it is important to understand these different customer segments and tailor market strategies to meet their needs.
Data provided by financial services research firm Phase 5 from their ‘Impact of the Pandemic on Consumer Financial Services’ July 2020 survey. Analysis provided by Madeline K. Aufseeser and Ron Mazursky for PayGility Advisors.