Lost in transition – how financial services can tap in to an underserved audience
Women in transition represent a growing opportunity for financial services providers, as long as they can understand and address their needs and develop products to suit their changing situations.
Move over millennials, there’s a new group of people the banks need to focus on. Clare Seekins from Market Gravity outlines the results of a research project into women aged 40 to 60 and how they are underserved in the financial services marketplace.
The team at Market Gravity carried out a research project looking into women in this age group who were experiencing life transitions, for example divorce or separation, empty nest, caring for relatives, starting a new business, returning to work, or taking senior roles within corporations. They focused on the financial industry and how it addressed the needs and lifestyles of these women. Transitions can be surprising or expected, detrimental or exciting , and often have a significant influence on their financial standing or financial planning. The team hypothesized that these women might be underserved, and therefore represent an opportunity for innovating current products or services to better address their needs.
In-depth interviews and extensive secondary research revealed that women are not a homogenous group. Their needs, behaviours and attitudes are varied as they are among other age groups. There are savers and spenders; those who are are risk-averse and risk-takers. Often, those who agree with the previous sentences in one breath will continue on to position women as a uniform consumer group in the next.
Though these women often have unique circumstances, their needs and wants regarding financial security and literacy are the universal and standard desires of any competent adult. Here is an overview of the overarching thoughts and themes from the research:
- I need the financial security to insulate against unexpected shocks – this is the most cited source of anxiety among this population. One woman and her family experienced a flooded basement, a break-in, and a granddaughter born with special needs in the span of five years. The debt piled up as these unexpected events first depleted her savings, then caused her to take out loans.
- I need a trusted source of advice, validation and recommendations – currently, word of mouth and Google are the most utilised and reliable informants. Word of mouth sources, like friends or siblings, often led those seeking advice to accountants, mediators, or even financial charities. Not one person cited the bank as a trusted source of support or advice.
- I need a system that is responsive to my perspective regarding financial planning – some women are savers, and some are spenders; some seem born with an inherent concept of long-term planning, while others prefer to live in the moment. Banks, financial planners, and other institutions treat all customers same and alienate those who don’t have a natural tendency towards understanding the time value of money.
- I need financial education to execute financial planning – unfortunately, neither a high school nor college education guarantee any degree of financial literacy. After her divorce at age 53, one woman was able to immerse herself in financial education through her brother and a local charity. The knowledge gave her confidence, and in the training she found useful tools to execute her newfound sense of empowerment and freedom.
Originating from these needs, the subjects also highlighted some direct ways the banks were not available to fulfil them, namely the following:
- Banks sell me things – the overwhelming sentiment towards the larger, more global brands was that the employees are salespeople, driven by their sales targets, not the customer needs.
- Banks don’t help me save – many of the women lamented that their banks didn’t play a larger role in encouraging them to save at a younger age. Essentially, they wanted someone to be the financial voice of reason.
- Banks don’t know me well enough to offer advice – the women in transition, like the larger population, have a wide variety of needs. The gaps in financial knowledge, confidence and tools vary widely, as do the needs for asset management, advice and investment products. Many people know enough to know that they need external support, but don’t think of their bank when consider where to turn.
This does not mean that women’s financial reality is the same as men’s. The ‘traditional’ division of the household financial responsibilities was especially salient for this group . Usually, one person knew everything about the financial situation, and their partner knew close to nothing. Most of the time (but not always) this was the man. When relationships like this break up, the partner with no knowledge of the finances found themselves in an extremely disadvantaged position.
Many women understand that their financial realities, as they differ from men’s, are the result of social and cultural forces that have influenced much of their lives: the salary gap, expectations of caregiving (both to children and the elderly), the male-orientation of the banking industry, and the other various barriers to career progression. Some of these conditions, especially when paired together, do mean that women need products with different features. For example, women’s often lower wages and longer lifespans require a different approach to retirement planning.
When taken together, these needs and gaps in banking demonstrate some real opportunities that financial services providers can address, with some businesses already leading the way. Market Gravity has developed many new products, aimed at addressing some of these needs.
Clydesdale and Yorkshire Banks launched B, an innovative banking app featuring many intuitive tools to help consumers take control and manage their money much more effectively, and it specifically addresses the need for easier ways to save money. It allows users to sweep cash between current and savings accounts and make payments at the touch of a button, and offers multiple savings pots, tagging and tracking of spending and can be personalised with tailored messages.
Retiready from Aegon is a free digital service that makes planning for retirement easier by bringing savings and investments together in one easy to manage account online. Other providers making good headway include Barclays’ Digital Eagles and Moneythink, in the USA. These initiatives engage wider populations and help them on the path to financial literacy and confidence, and women in transition are a part of these populations.
Where to next …
It is clear that the digital transformation of banking is a real opportunity to meet the needs of consumers of all age groups but women in these transitional phases are currently underserved. Conversely, ‘women-focused’ initiatives tend to fail quickly because the answer is not ‘a bank for women’, but ‘a bank that addresses a variety of audiences and their needs, not just a subset of the population’.
We’re excited to see these financial services providers developing products and services and organisations would be wise to create innovative solutions to address the financial needs of new, wider audiences, now and in the future.
For further information on Market Gravity, please visit the website http://marketgravity.com/
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