Industry
Banking
Banking Services Transformation: Unlocking Exponential Value
Highlights
- The disabled and older customer segments encounter difficulties in accessing banking services, exposing them to the risk of financial and economic exclusion.
- While financial institutions have made efforts to improve access to banking for these underserved segments, these initiatives have been inadequate to meet the needs of these cohorts.
- Banks must take targeted action across four key areas—boundaryless ecosystems, smart service, smart products, and humane support for caregivers—to improve access to banking services for these segments.
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Overview
The UN mandated 17 Sustainable Development Goals (SDGs) in 2015.
The objective of Goal 10 is to reduce inequality across the world by driving economic inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. Achieving SDG 10 requires sustained efforts to reduce inequality and ensure financial autonomy for all. Financial inclusion or ensuring access to financial services for all segments of society is therefore a key pillar of SDG 10.
According to a UN Department of Economic and Social Affairs (UNDESA) reporti, in 2022, 771 million people or 10% of the global population was old (aged 65 years or above), and this is expected to touch 16% by 2050. In addition, UN dataii also reveals that 1 billion people or approximately 15% of the global population live with some form of disability. These two cohorts face growing challenges of health and well-being, and require specialized financial support and advice. Interestingly, according to a US Federal Reserve Reportiii, the older segment holds a higher proportion of wealth compared with the rest of the population—net worth figures of the population peak in the age group of 65 to 74. However, for the persons with disability (PWD) segment, the average annual income is usually lower and expenses are typically higher. This segment therefore needs smart, customized financial products to address their unique pain points; for example, high return investment products and cost optimization options.
The reality, however, is different. These demographic segments still experience difficulties in accessing financial services, exposing them to the risk of financial or economic exclusion. Banks globally have not fully addressed the unique needs of these cohorts. Moreover, rapid digitalization has aggravated the problem with the older segment finding it difficult to effectively use and navigate unfamiliar digital banking interfaces, making them vulnerable to digital financial exclusion. This has resulted in consumer advocacy in several countries, and regulators and industry groups are pitching in with rules or guidelines for banks to better address the needs of these demographies. Globally, regulations have been introduced to reduce discrimination in accessing banking services, both online and offline. Banks are expected to develop systems and train their workforce to manage the older and PWD segments with empathy and care.
The proportion of citizens with disability will likely increase with age and the challenges in accessing financial services need to be addressed urgently as the global population grows older. For banks, this is an opportunity that has remained largely unexploited. Banks must urgently invest in making financial services more accessible, not just for financial equity but also for customer retention and business growth as these customers are often more loyal to their banks if their financial needs are met. Banks must grab the opportunity to capture customer mindshare by tailoring innovative digital products for the older and PWD segments.
TCS conducted a secondary research study to understand how banks are currently catering to the needs of these segments and identify gaps. Based on the findings of our analysis, we offer key takeaways to help banks capitalize on this opportunity and enhance access to financial services for these underserved segments.
Research scope and methodology
The research focused on top economies of the world and their key retail financial institutions to understand how banks support the older and PWD segments.
It covers North America, UK, European Union, Japan, and India. This geographical scope represents over one-third of the world’s population and over 60% of the global economy. The research covers the regulatory and financial industry guidelines in these geographies and the response from top retail financial institutions, derived from their press release statements.
Focus geography |
Retail financial institutions |
USA |
JPMorgan Chase Bank of America Citizens Financial Regions Bank M&T Bank |
Canada
|
RBC TD Bank Scotiabank |
UK |
HSBC Lloyds Bank NatWest |
European Union (EU) |
Santander BNP Paribas ING Deutsche Bank UniCredit |
Japan |
Mitsubishi UFJ Mizuho Financial |
India |
State Bank of India ICICI Bank Yes Bank |
Table 1: List of retail financial institutions covered by the research
Accessible banking initiatives
Our research examined what on-the-ground action has been taken to improve access to financial services for the older and PWD segments.
We found that while banks are redesigning digital channels to improve accessibility, even offline products or services are getting innovative makeovers to support disabled and older citizens.
Accessible banking initiatives by banks
Banks have undertaken initiatives to cater to the senior and PWD segments:
- A big North American bank has set up a dedicated phone line with video facility to enable hearing impaired customers to access remote banking services
- A European bank has upgraded its entire portfolio of cards to make financial services more accessible for visually impaired and partially sighted customers. The cards have distinct notches that help customers distinguish between different cards by touch.
- A UK bank provides on-demand manual assistance for visual and hearing-impaired customers to book longer branch appointments, special interpreters for the deaf and visually impaired, talking ATMs, signature stamps, among others.
- Many banks have introduced mobile branches with ramps for customers with mobility issues or are wheelchair bound.
- A large US based bank has recommended to the US Government that asset and income limits to receive social security benefits should be relaxed for people with disabilities.
- A large North American bank has opened a branch to serve the hearing impaired; the staff are trained in sign language and have the requisite skills to provide seamless service to the deaf community.
- A challenger bank in Eastern Europe has introduced a debit card backed by audio technology for the visually impaired; the card offers voice enabled payment services to the visually impaired, empowering them to independently manage their finances in turn providing financial freedom.
While the above list is not exhaustive, these initiatives are inadequate as evidenced by a UNDESA disability and development reportiv which reveals that 8-64% of the PWD segment considers banks in five developing countries inaccessible. The same report also reveals that in developed countries, 28% of banks and 12% of ATMs were inaccessible to wheelchair-bound people. The demand for accessible banking is thus equally relevant in developed economies.
PWD and older segments: Challenges in accessing financial services
Despite initiatives taken by banks and regulatory action, the PWD and older cohorts face difficulties in accessing financial services (see Figure 1).
Figure 1: Challenges faced by the PWD and older demographics in accessing banking services
Lack of physical access: This challenge manifests itself differently for people with different forms of disabilities - motor, visual, auditory, and cognitive impairments. Customers from older and PWD segments with motor disability face challenges in even entering bank branches, especially those requiring them to climb stairs. Similarly, branches are not equipped with special facilities to cater to those with visual, auditory, or cognitive impairments, effectively resulting in the financial exclusion of these demographic segments.
Challenges with digital channels: Visually and cognitively impaired persons face hurdles in using digital banking channels. For example, people with cognitive disabilities may find it difficult to remember passwords while the visually impaired may not be able to use the website or app without support. Complex text descriptions, lack of contrast, small text size, inefficient screen-readers among others are other common barriers.
Lack of financial literacy: Older and PWD segments often lack knowledge of financial concepts and products as well as the skills needed to make informed financial decisions in turn resulting in financial inaccessibility. Financial institutions offer limited products for these segments and this is further compounded by banks not amplifying products customized for their needs. For example, most US banks do not actively promote Achieving a Better Life Experience (ABLE) accounts—these are specially designed for the disabled and offer tax benefits on contributions meant for meeting disability expenses. However, the PWD customers do not even see it when they log in through their banking apps.
Cybersecurity and fraud: The PWD and older segments are often the victims of digital or telephone frauds. The rise of deepfakes increase the risk of impersonation over voice or even video calls, and this population segment is vulnerable as they are typically unaware of such new forms of fraud. Moreover, banks’ failure to implement financial education programs focused on fraud prevention for these segments has further worsened the situation.
What banks can do
Financial institutions have made efforts to make their products and services more accessible, however, significant gaps remain.
Banks can do a lot more to enable accessible banking services (see Figure 2), which will be a key differentiator in driving growth and winning the trust and loyalty of these two underserved segments.
Figure 2: Initiatives to improve access to banking services
We believe that there are four main areas where banks can take targeted action to address the aforementioned challenges:
- Building a boundaryless ecosystem for value-added services
- Providing smart services to improve channel engagement
- Creating smart products
- Providing humane support to caregivers
Banks must adopt a focused approach to enhance accessibility capabilities, which will result in multi-pronged impact across the four challenge areas (see Figure 3), improve the lives of these two segments, and drive growth by unlocking new business value.
Figure 3: Relative impact of targeted action across four key areas
Boundaryless ecosystem for value added services
Blending technology, business innovations, and humane service while ensuring regulatory compliance is necessary to advance accessible banking through the ecosystem model. In our view, banks must orchestrate a three-way ecosystem, bringing together technology service providers, hardware providers, and other service providers including non-government organizations (NGOs) (see Figure 4).
Figure 4: A three way accessible banking ecosystem
Collaboration between traditional and non-traditional financial service providers, telecom companies, adjacent technology providers, NGOs and international organizations working for the rights of the disabled is key. Participants in the ecosystem must include fintechs, health equipment manufacturers, pharmacies, testing and diagnostics providers, health and home care service providers, specialized transport providers and more. For seamless functioning of the ecosystem, banks must enable user-friendly interfaces that adhere with Web Content Accessibility Guidelines (WCAG). In addition, they must collaborate with technology providers to tailor innovative digital financial products and services that are competitively priced for the PWD and older segments.
- Lack of physical access: Banks can tap into the distribution network of the ecosystem partners to design bundled products and deliver them at customers’ doorstep. App-based options can be enabled to help disabled and older customers to raise requests for in-person assistance. The ecosystem orchestrated by the bank can be a single-stop option for older and PWD customers to identify service providers they need for their unique daily needs. For example, payment and subscription features can be embedded into the app allowing these customer segments to easily pay for doorstep service from home care or specialized transport providers. This will help banks earn additional revenue and customer loyalty.
- Challenges with digital channels: Banks can develop customized apps to meet the unique needs of these segments or embed banking and payment options in third party apps through API linkages. The former option is more beneficial for banks as it helps them create an ecosystem of service providers for their older and PWD customers. Customers can sign in to the bank app and access third party services by simply agreeing to share their details with ecosystem partners. These services may also include fintech partners who provide wealth management and investment advisory. For transactions, banks can develop customized loyalty programs around the specific needs of this population segment—partnering with equipment manufacturers for disabled, retail, lifestyle, and healthcare service providers.
- Lack of financial education: NGOs and customer advocacy groups can be onboarded into the ecosystem to impart financial literacy and education programs to the PWD and older segments to spread awareness about government schemes and benefits for the disabled and product availability. Such programs can be delivered through either physical or virtual channels or both. Community engagement initiatives can also be organized.
- Cybersecurity and fraud: Banks must partner with hardware providers in the ecosystem to enable biometric tools for single sign-in features and know your customer (KYC) processing for the older and PWD segments. Customers should be able to securely access the services of ecosystem players without additional authentication.
Smart services
Accessible banking services imply different service options for people with varied disabilities. The channel of engagement determines the types of service and the digital or in-person support needed for optimal experience. Digital banking channels have improved accessibility for customers with motor and auditory impairments but people with cognitive and visual impairments still face difficulties.
- Lack of physical access: Many bank branches are inaccessible to the PWD and older segments. Financial institutions must design smart and accessible self-service kiosks and offer support services through human as well as digital channels as appropriate. For example, a visually impaired person can be provided with artificial intelligence (AI) powered audio guidance at self-service kiosks and branches through banking apps. These services may also be human-driven with trained professionals offering financial guidance to people with cognitive impairments.
- Challenges with digital channels: Banks must revamp digital interfaces to comply with the latest digital accessibility standards recommended by the WCAG 2.2 standard. Automated customization of the app interface to suit visually or cognitively challenged customers is key. For example, features such as bigger font, voice assistance, and image summarization can be enabled for visually impaired customers. An AI backed digital assistant can provide voice assistance to simplify or summarize product details, suggest customization options for investment products that the customer shows interest in, and recommend alternative products for older and PWD customers (see Figure 5).
Figure 5: AI powered assistance for disabled and older customers
- Lack of financial education: Leveraging generative artificial intelligence (GenAI) and extended reality can help banks support customers in making informed decisions about the right product or service for their needs. In-person channels like branches can set up digitally assisted kiosks and introduce automated financial education programs through text, image, voice, or video depending on the type of disability.
- Cybersecurity and fraud: Banks must provide login options that do not require remembering passwords or personal identification numbers (PIN) to help cognitively impaired customers. This can be done through a combination of biometrics, one-time-passwords, and QR code generation on mobile phones.
Emerging smart product categories
In addition to customizing existing digital financial products for disabled and older customers, banks must tailor innovative financial products with flexible pricing options. For example, disabled persons often face difficulties in availing loans due to subpar credit scores. Similarly, being risk-averse, they may also face challenges in achieving financial control, which involves identifying suitable investment products to meet goals such as creating an emergency fund or paying off debt or saving for retirement. Designing smart investment and credit products to meet the specific needs of these segments is a significant business opportunity for banks.
- Lack of physical access: Older citizens, especially in the age group of 65-74, are likely to have the highest net worth compared with other customer segments. Banks must offer doorstep service to customers with mobility issues. A hybrid model comprising AI powered wealth management tools and on-demand human support can be offered to digitally-savvy older customers who are unable to physically visit the branch.
- Challenges with digital channels: The banking app must enable access to Government schemes and benefits when the customer confirms his/her disability status. AI assistants can be deployed to create awareness of products specifically designed to meet older and PWD segments’ unique needs and explain the benefits of such products. This will ensure customers understand the implications clearly and make informed decisions. Customer experience can be personalized—for example, products can be personalized to accommodate the special needs of individual customers with different disabilities.
- Lack of financial education: Banks must deploy GenAI powered digital assistants to help disabled and older individuals choose the right products. Additionally, banks can organize inheritance planning workshops for older mass affluent customers to educate them on how they can distribute their wealth and the services available.
- Cybersecurity and fraud: The older customer segment is typically more vulnerable to fraud as they may not be sufficiently digitally-savvy to recognize an attempt to defraud them. Banks must explore video biometric technologies that protect against deepfake and other sophisticated fraud techniques as well as partner data sharing for KYC and remote life certification.
Enable caregivers with humane support
Caregivers are critical for the lives of disabled and older citizens to run smoothly. Banks, however, have failed to adequately support caregivers in managing money for the person in their care as well as meeting their own financial well-being needs. This offers banks a unique opportunity to simplify transaction processes as well as provide customized financial products to families and caregivers of disabled and older customers.
- Lack of physical access: With appropriate legal and consent agreements in place, banks must empower caregivers to manage in-person transactions on behalf of the person in their care. Disabled and older customers must be given the option to raise requests over digital channels for such in-person engagements.
- Challenges with digital channels: Banks must design disparate digital banking apps for disabled and older customers. Such apps must offer customers an option to provide managing rights to their caregivers to perform certain transactions on their behalf, for example, money transfer to specific accounts or bill payments till a certain limit. Banks must enable joint visibility of account transactions and joint approval for investment decisions.
- Lack of financial education: Banks must disseminate information to the caregivers of PWD and older segments about the availability of specialized offerings to meet specific needs. AI powered digital assistants on mobile apps can also be leveraged to improve awareness and initiate sales or support after sales services.
- Cybersecurity and fraud: Banks must introduce digital KYC for caregivers for dual control of banking and payments services.
Success factors
We believe that banks should particularly focus on two key ideas while implementing programs to improve accessibility to financial services.
Customer voice and iterative development: Banks must adopt an empathetic approach to understand the constraints of the PWD and the older segments. This will require them to consult, collaborate, and partner with organizations, charities, and academia that support elderly and challenged people to gain insights on the systemic challenges that limit access to banking services and result in financial exclusion. Additionally, banks must iteratively enhance or upgrade applications to address evolving customer needs due to deteriorating mental and physical health.
Inclusive-by-design: Banks must factor in inclusivity while designing new financial products and services—inclusive-by-design should be the mantra, going forward. This will require banks to collaborate with underserved or excluded customer segments during all stages of product and service development. Banks must consider including disabled people as co-designers and co-developers in the core product team to create more accessible and equitable banking experience.
The time for change is now
Customers belonging to older and disabled segments need greater support to access financial services and advice.
Considering their growing numbers in developed and even developing economies, an opportunity exists for banks to unlock business value and enhance SDG compliance through innovative accessible banking initiatives. Banks have taken some steps in this area, but a lot more needs to be done.
Our research shows that banks must invest in designing differentiated products and services for the older and PWD segments and their caregivers. This will help banks capture the loyalty of these segments, especially as the average age of customers is rising globally. In addition, building an ecosystem of external partners dedicated to supporting the PWD and older customer segments can have great impact.
Last but not least, banks must adopt an accessibility-by-default philosophy—where the product and service design approach is centered on equity and inclusion. This will require a shift in mindset on the part of financial institutions and mandate a multi-pronged strategy that prioritizes a culture of inclusion both internally and externally in the marketplace. And sooner the better—financial institutions that make rapid strides toward this goal will benefit from the early mover advantage.
Reference
iFrom World Population Prospects 2022: Summary of Results, Population Division, United Nations Department of Economic and Social Affairs, ©2022 United Nations. Used with the permission of the United Nations. https://www.un.org/development/desa/pd/sites/www.un.org.development.desa.pd/files/wpp2022_summary_of_results.pdf
iiFrom International Day of Persons with Disabilities, 3 December. Used with the permission of the United Nations. https://www.un.org/en/observances/day-of-persons-with-disabilities/background
iiiFederal Reserve Bulletin – Changes in US Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances; September 2020; https://www.federalreserve.gov/publications/files/scf20.pdf;
ivFrom Disability and Development Report, Realizing the Sustainable Development Goals by, for and with persons with disabilities, Department of Economic and Social Affairs, ©2019 United Nations. Used with the permission of the United Nations. https://www.un.org/development/desa/disabilities/wp-content/uploads/sites/15/2019/07/disability-report-chapter2.pdf
