FinXTech’s Need to Know: Elder Finances

There’s a bit of a conundrum in the financial technology space. As more services move to the digital realm, the premise is that they become more accessible and relevant to a broader audience — specifically, millenials and Gen Z.

But self-servicing digital experiences don’t necessarily benefit an aging population.

A 2016 study from the U.S. Census Bureau reports almost 50 million adults 65 years and older are living in the U.S. That number is projected to surpass 100 million by 2060, which will outnumber the amount of children under 18 in the U.S.

There is no set age that represents an older adult’s inability to manage their finances — I know friends today who handle their parents’ finances while they are in their mid-forties, and also have a colleague whose father can still write checks at 90. Banks have an opportunity to facilitate the transition of financial management from adult to caregiver, and ensure that those customers stay with the bank.

Fintechs that specialize in the management and monitoring of elder finances can help banks ease the burden of that transition.

There are three main ways that fintechs can work with banks in this space: They can provide a digital banking platform tailored toward elder populations, they can monitor transactions for fraud and they can provide financial advisory services or planning.

Banks can work with fintechs to provide a digital banking interface that organizes elder finances for account holders. Managing insurance, retirement, medical, housing and emergency costs can feel next to impossible for caregivers who suddenly gain access to elder accounts. But, being able to access and manage those accounts from one platform could save time and prevent a potential headache.

Carefull is one such digital banking platform. Accounts can be set up by the elder themselves, with assistance or by a caregiver. From the platform dashboard, users can access past and future bills, income, deposits, assets and transactions made. An extra layer of transaction and fraud monitoring alerts users when suspicious activity is detected.

Multiple users can be added to the account on a view-only basis, and transactions can not be initiated or carried out by anyone except the elder within the Carefull platform. Users can even connect with financial advisors and planners within the bank.

Elder fraud can be extremely difficult to spot, and increasingly common. A 2019 report from the Consumer Financial Protection Bureau looked at Suspicious Activity Reports (SARs) that dealt with elder financial exploitation from 2013 to 2017. The study found that filings quadrupled within those four years, and that those reported accounted for only a fraction of incidents.

When elder fraud occurs — whether it be malicious (from a bad actor), a crime of opportunity (from a caregiver) or a self-induced mistake (falling for a phishing scam) — the losses are apparent. The average lost in each SAR totaled $34,200. Losses were greater when the elder knew the perpetrator versus a stranger: $50,000 compared to $17,000.

EverSafe works as a second set of eyes on bank, investment, retirement and credit card accounts. Its analytics technology looks for irregularities within transactions, transfers or withdrawals made from each account, and sends alerts to a trusted caregiver, whether it be a spouse, child or hired help. EverSafe, with a partner bank, can also help guide families through remediation processes when fraud or theft occurs, and in some cases will reimburse lawyer fees.

Banks can take a proactive approach with aging populations with fintechs that offer advisory services — assisting with in-person advisors or through artificial intelligence. Genivity’s HALO platform operates as a software-as-a-service solution that helps bank customers plan for the biggest risks to their longevity, health and finances. Each customer receives a personalized report that includes how many years they are expected to live with assistance and its cost, including out-of-pocket expenses.

Full reports are given to financial advisors, so that clients are incentivized to speak with them about their future financials. HALO can be white-labeled and embedded directly into a bank’s digital platform.

Banks will have to strengthen their reactive and proactive strategies when it comes to protecting and catering to aging populations — and partnering with a fintech may be the best way forward for many. Doing so may help banks accumulate life-long customers across generations.

Carefull, EverSafe and Genivity are all vetted companies for FinXTech Connect, a curated directory of technology companies who strategically partner with financial institutions of all sizes. For more information about how to gain access to the directory, please email finxtech@bankdirector.com.