“THE older the wiser” may ring true for much of life, but not for our ability to handle money. Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in. “Age-friendly” banks are beginning to learn how to protect vulnerable older customers.
The most dramatic forms of age-related mental deterioration are neurodegenerative diseases, like Alzheimer’s. But even “normal” ageing can cause cognitive change. Financial-management skills are often early casualties, because they demand both knowledge and judgment.
Older people are more likely to struggle with day-to-day banking and are more susceptible to poor investment decisions. They are also more vulnerable to fraud or to financial exploitation, often by relatives. In 2010 the over-65s in America made up 13% of the population but had over a third of the wealth. British pensioners became especially vulnerable when reforms in April 2015 allowed them to withdraw savings previously locked up. Newspapers fretted that people would splurge their pensions on Lamborghinis. A greater concern should have been that they became easy prey for scammers. By March 2016 cold-callers had approached more than 10m people about their pensions, according to Citizens’ Advice, a charity.
It is difficult to monitor financial abuse, because victims rarely report it. True Link Financial, a financial-services firm, estimates annual losses in America from financial exploitation and abuse of the elderly at between $3bn and $37bn. In Britain the Financial Conduct Authority has issued warnings about investment-fraud schemes, coaxing the elderly into trading their savings for shares, wine or diamonds (which never arrive).
The older brain seems more susceptible to “too good to be true” scams, from lotteries to dating schemes. According to the “Scams Team” at Britain’s National Trading Standards, a consumer-protection body, the average age of victims of mass-marketing scams is 75. Louise Baxter, the team’s manager, says cognitive decline in older people is a risk factor that criminals exploit, and the dangers are likely to rise in tandem with the incidence of dementia. Phil Mawhinney, from Age UK, a charity, says people living alone, as half of Britons over 75 do, are more likely to be befriended by a fraudster. So-called “sucker lists” of easy targets circulate among criminals.
Banks have been slow to respond, at first seeing these risks as purely a matter for customers. (As one manager puts it, they “have the liberty to make dumb financial decisions.”) Most “age-friendly” measures have focused on physical limitations (such as talking ATMs for the blind) or helping people get online. However, many banks are recognizing cognitive decline as their problem, too. Barclays, a British bank, uses voice recognition to help customers who have trouble with passwords. Banks are training staff in how to spot dementia and signs of financial abuse. First Financial Bank, in America, gives staff who uncover a scam a “Fraud Busters” pin. And better ways to identify fraud are popping up: algorithms can help staff detect changes in spending patterns. Barclays used data from old cases to pinpoint 20,000 high-risk customers, whom it monitors and advises.
Analysis: This article sparked a greater sense of passion for this project that I had been hoping to find. From this reading, I learned that the elderly population struggles with being more vulnerable to financial scams and abuse, not knowing what to do with their money in terms of retirement and estate planning, not understanding how to utilize mobile/digital banking, and detecting their financial troubles too late. To me, the key issue here is that these “problems” are being detected and addressed too late. I find that banking in the elderly population deserves a great deal of attention from a problematic standpoint, so that one can truly understand why these “problems” are even occurring in the first place and what can be done to stop them. I think it is great that banks, such as the British bank Barclays, are using technology, like voice detection to assist elderly customers that have forgotten their passwords, but I wonder what other preventative innovation can be done. My excitement grows as I question how we as designers can work with banks to eliminate a great deal of financial stress later in people’s lives, and what we can do early on to ease the confusion in elderly customers. What type of education, planning, and personability can occur early on in life, so people are constantly taking care of their money and thinking about their future? Overall, I believe this front-end perspective would work well to improve the quality of customers’ lives from the time they are young to old.
Citation:
The Economist Newspaper. (n.d.). The elderly, cognitive decline and banking. The Economist. https://www.economist.com/finance-and-economics/2017/02/11/the-elderly-cognitive-decline-and-banking
