Charting the future course of Age-Friendly Banking

Living Longer: We Need Age-Friendly Banking

Like most institutions, the American banking system must evolve to meet current needs. Although we all age, and although people on average are living longer and healthier lives, our society has yet to adjust for this substantial demographic shift. Age-Friendly Banking is a set of recommendations that NCRC has developed for federal, state, and industry stakeholders that will improve the financial system’s accessibility, responsiveness, and safety for older adults, specifically those who are low-and-middle income. It is a crucial step towards not only the protection of a rapidly growing and encompassing population group, but also the capitalization of an immense economic opportunity. Older adults (Adults 65 and older) currently make up 15 percent of the population^[1], but they represent a third of banked individuals, making them powerful players in the nation’s economy and investment opportunities.

However, as the older population increases, economic vulnerability is also on the rise. America’s older adults are losing an estimated $37 billion in fraud annually, creating financial uncertainty and increased public expenditures^[2]. With the adoption of Age-Friendly Banking standards older adults can avoid victimization and become financially secure individuals who can contribute to the growth and success of their communities. This paper will focus on the significance of Age-Friendly Banking and its potential for improving the financial well-being of older adults.

NCRC’s Age-Friendly Banking Initiative

NCRC has made a commitment to address older adult economic security initiatives. An important aspect of this commitment is the creation of a “win-win” opportunity in which millions of older adults can access effective financial products and services, while financial institutions benefit from a larger and more stable customer base. NCRC created the Bankers Community Collaborative Council (BCCC) in the late 1990’s to serve as a forum to identify key challenges and opportunities for access to financial services and products for low- to moderate-income communities. NCRC staff and BCCC members, who are composed mostly of large financial institutions, started noticing an increase in foreclosures and financial exploitation impacting older adults around 2008, the height of the recent financial crisis. As a result, NCRC established National Neighbors Silver, a special initiative of NCRC to address issues of economic insecurity among older adults. NCRC worked with BCCC members to adapt banking principles and products that would benefit economically vulnerable older adults.

NCRC launched the concept of Age-Friendly Banking in 2012 and conducted a benchmark survey of bank services and products for older adults. The results of the survey found that large financial institutions did not include many products or services geared to older adults. NCRC undertook more extensive research of financial institutions, regulators, utilized industry research, and expertise of the aging network and identified promising practices and products that were detailed in A New Dawn: Age-Friendly Banking. The overarching goal of NCRC’s Age-Friendly Banking initiative has always been to improve the economic well-being of financially vulnerable older adults through amplifying the business opportunity of older adults as a critical customer base for financial institutions.

Core Characteristics of Age-Friendly Banking

NCRC’s six Age-Friendly Banking principles offer financial institutions, regulators, community-based organizations and the aging network specialized financial products, services, and protections that improve the financial health of economically vulnerable older adults.

1) Protect older adults from financial abuse: Banks and regulators should be conscious of the efforts being made to commit financial fraud and exploitation against older adults and take action to prevent these cases. There are resources available at the local and state level, like Adult Protective Services, that can provide assistance in elder financial abuse.

2) Customizing financial products and services for older adults: Certain products and services offered by financial institutions can help older adults manage their accounts more easily and affordably, and live with more financial security and stability. Some of these products and services include accounts with limited fees and no minimum balance requirements, retirement planning services, and short-term low-interest loans for home modifications, and staff training on the specific needs of older adults.

3) Expand affordable financial management: Financial institutions should offer financial education for older adults and give them the information and recommendations necessary to make sound decisions. Financial institutions, community-based organizations and local governments can also partner with financial counseling organizations to offer education and coaching for older adults.

4) Access Critical Income Supports: Financial institutions can help older adults access and receive income supports. They can help identify those programs that old adults could apply to and benefit from, such as the Supplemental Nutrition Assistance Program (SNAP), Low Income Heating and Energy Assistance (LIHEAP) and Social Security Disability Insurance (SSDI).

5) Facilitate aging in the community: Financial institutions can help older adults make home modifications necessary to remain in their homes and age safely, comfortably and affordably. A financial institution can become a Low-Income Housing Tax Credit investor and provide funds for housing development through construction and small loans. Housing counseling is another critical service that assists older adults in preserving their housing equity and assets. Older adults who are able to age in place save the health care system thousands of dollars by being active and healthy[3].

6) Improve accessibility to bank locations and services: Physical bank branch locations make bank services more accessible for older adults, especially when many financial services are increasingly housed online. Certain technology features can increase access to services especially among older adults with physical disabilities.

The Status of Age-Friendly Banking in the Financial Services Industry

NCRC has focused the past six years on building momentum around Age-Friendly Banking. Through research, three major papers, innovation labs, regional roundtables co-hosted by Federal Reserve Banks and NCRC’s national, annual Age-Friendly Banking Convenings, paired with financial and technical support to NCRC member-led Age-Friendly Banking initiatives, there has been a significant enhancement in the awareness and potential of Age-Friendly Banking. As stakeholders in this initiative, financial institutions are taking steps to provide products, services and protections to their older clients to ensure their financial security and wellbeing.

Standard banking products do not always meet the needs of older, especially low- and middle-income adults. Effective banking products that are tailored to the needs of older adults are key to ensure their ability to remain independent and financially secure. The following financial products and services are some examples of current, leading Age-Friendly Banking innovations in the field.

Retirement Planning

Retirement planning is vital for older adults and has become a widely offered service by financial institutions. Chase Bank has developed a “Retirement Calculator” to help users determine if their retirement income and assets will be sufficient to meet their financial goals[4]. Using information such as current income, retirement savings/assets, retirement age, and expected health outcomes, the calculator provides users with a projection of how long a customer’s savings is expected to last and estimates the probability of meeting retirement goals.

Bank of America has started hiring “financial gerontologists” to assist older adults in planning for longevity and retirement as well as assisting families and caregivers with managing an elder’s finances. These gerontologists are just a part of Bank of America’s larger Age-Friendly Banking retirement centers. These locations provide a wide array of Age-Friendly banking services from advisory to fraud alerts. Moreover, these locations provide an Age-Friendly physical space with good lighting, larger fonts, and bank tellers who are willing and able to work with older adults[5].

Reporting Financial Abuse

Wells Fargo Advisors have also been an example of a financial institution with age-friendly policies. The training for all employees includes 10 questions related to identifying and reporting cases of financial exploitation and provides employees with the tools to be able to engage appropriately with the situation and the client[6]. As a follow-up to identifying older customers that were victims of financial fraud and exploitation, Wells Fargo Advisors created The Elder Strategy Group. This group is made up of a network of lawyers that advisors can contact when they suspect a case of financial exploitation of someone due to dementia or diminished capacity. The Elder Strategy Group is responsible for following up on all reports of financial abuse and reporting to adult protective services or law enforcement when necessary.

First Financial has demonstrated a commitment to curbing financial exploitation through its FraudBusters program. The bank has implemented a comprehensive fraud protection strategy which includes employee training at every level, community education, and partnerships with local law enforcement and social service agencies. Employees who have actively prevented fraud are recognized and rewarded with a FraudBusters pin, building trust between staff and customers.

Targeted Checking Accounts

TD Bank has recently begun to offer TD 60 Plus Checking^SM which provides features specifically designed to benefit older adults. Free paper statements and bank checks are available as well as overdraft protection. Features such as waived monthly maintenance fee when a minimum balance of $250 is maintained and a .25 percent discount on home equity lines of credit allow seniors to bank without the fear of predatory fees and loans[7].

Bank On 2.0 is a platform that supports local coalitions and financial institutions to offer consumers safe and affordable bank accounts, sponsored by national and local banks. Bank On is managed by the Cities for Financial Empowerment Fund. An increasing number of older adults are either unbanked or underbanked, meaning that they engage in alternative banking, such as payday and other predatory loan practices at least once a year[8]. Bank On trains financial counselors to assist those who have not utilized commercial financial institutions and those who have left traditional banking institutions in opening affordable and safe bank accounts. 31.4 percent of multi-session individuals who work with financial counselors succeeded in opening or transitioning to a safe and affordable bank or credit union account[9]. The program assists people of all ages who lack access to traditional banking, primarily older adults who are especially vulnerable to financially exploitative banking practices. Bank On has been piloted in Chicago, Los Angeles, Miami, New York City, and San Francisco[10]. The products and services they offered were initially recommended by the Federal Deposit Insurance Corporation, Comptroller of the Currency, and the Federal Reserve System[11].

Another innovation in financial services to help older adults manage their accounts and protect them against financial fraud and exploitation are the use of “View-Only” accounts. Account Smart^TM Tools, developed by the Bank of American Fork, Utah, include the option for “View-Only “accounts that allow a trusted third party to directly access an older adult’s account information without being able to make transactions[12]. TD Bank has also begun offering a similar feature which allows for a trusted third party who has been granted power of attorney to view bank activity[13]. Incorporating these products and services into mainstream financial institutions gives LMI older adults the ability to refrain from using alternative banking and be equipped with the tools and support necessary to remain financially stable and secure through the use of traditional banking.

Training

Bank of America’s Age-Friendly Banking Retirement Centers also provide support for cognitive decline. The Know Your Customer and Alzheimer Awareness Building modules train staff to recognize and deal with cognitive impairments, allowing them to better protect customer assets[14]. Understanding the financial needs of older adults and the barriers they face in managing their finances is crucial for financial institutions to design products that ensure financial security for older adults.

While not a US financial institution, Barclays bank in the UK has been a leader in age-friendly financial practices and policies as well. Their online training program, “Community Driving License” instructs employees on how to best interact with more vulnerable customers. The training consists of modules on fraud and exploitation, dementia, vulnerabilities, and accessibility. Barclays’ data analytics work to identify customers who are more at risk for financial fraud or exploitation by identifying customer characteristics that may put them at greater risk^[15]. Additionally, Barclays works with community organizations in the UK to provide caregivers with the tools to help manage an older adult’s finances while protecting them from fraud. They also provide caregivers with resources to help ease the burden of managing another’s finances and are working on technologies that will help caretakers be able to easily access small amounts of money through prepaid cards and wearable bands. Barclays also makes a point to record specific customer needs in their files, for example if a customer has hearing or sight impairments, to better equip employees to cater to the needs of their older customers^[16].

Next Steps in Age-Friendly Banking

It was clear at the inception that Age-Friendly Banking had significant potential given the shifting older adult demographics and the growing economic vulnerability of older adults. The good news is that a wide range of financial service providers, regulators, aging network, and community-based practitioners are comfortable with the concept of Age-Friendly Banking. The challenge is how we collectively reach vulnerable populations who most need Age-Friendly Banking. NCRC plans to implement the following strategies to expand Age-Friendly Banking in the next two years:

Emphasize LMI Older Adults – According to the National Council on Aging, over 23 million Americans age 60 and older are economically insecure[17]. A joing study conducted by the California Coalition for Rural Housing and NCRC on the banking needs of LMI older adults concluded that older adults desire the following six services from their financial institutions: (1) No-to-low-cost, no-fee checking accounts; (2) Low-interest lending and credit products; (3) Assistance accessing public benefits; (4) Help avoiding financial abuse and fraud; (5) In-person customer service; and (6) Early-intervention retirement planning. NCRC will continue working with financial instutions to ensure that these practices are widely adopted for the benefit of the broader community.
Sharpening the Business Model – NCRC and our financial institution partners need to make an explicit business case that Age-Friendly Banking protects older and LMI adults resulting in a more stable customer base.We should discuss how Age Friendly Banking strengthens the business model of banking resulting in greater financial resiliency on the part of the older adult. Developing specialized financial services and protections will ensure that older adults make wise decisions withtheir financial resources and investments. The business case should offer a series of recommendations and resources for financial institutions. The business strategies may vary between large and small banks.
Integrating Age Friendly Banking as a core element of financial capability and wealth preservation – Older adults are increasingly vulnerable to financial exploitation due in part to decline in cognitive decision making and analysis as part of the life process[18]. Training bank staff to recognize signs of dementia and use dementia friendly communicating skills is vital for the safe banking of the cognitively declined. The primary goal for older adults is preserving wealth and minimizing financial expenses. Offering financial capability support through financial education, counseling, and coaching to older adults is critical for maintaining their financial well-being and independence. Financial institutions can adopt some of the tested financial curriculum and counseling, and partner with organizations that help build financial capability for bank customers. Money Smart for Older Adults developed by the Consumer Financial Protection Bureau (CFPB) and Federal Deposit Insurance Corporation is an effective education curriculum to deploy. Older adults will likely be receptive if both financial institutions and community-based organizations jointly promote the need for financial education.
Targeting and Marketing Age-Friendly Banking to vulnerable populations – Older adults are a very heterogeneous population and a growing number of older adults acquire various physical and cognitive disabilities as they age.Financial institutions need to develop specialized services for older adults around accessibility to financial products and services and monitoring the financial decisions of older adults. The Senior Ambassador Program developed by NCRC member Northwest Side Housing Center is a good example of a partnership with First Midwest Bank in Chicago. Every month the bank holds a Senior Ambassador Day offering products, services, trained staff and guidance to older adults, who attend these days in significant number. Additionally, a number of older adults who are immigrants may not speak English which makes language support in Spanish or other major spoken languages helpful. Financial institutions should have bi-lingual staff as tellers and customer service personnel. Financial institutions can develop target market plans for diverse older adults, and partner with local organizations and networks that serve older adults.
Designing and Implementing Age-Friendly Banking Outcomes – Defined metrics are needed to ensure for the consistent evaluation of Age-Friendly Banking practices and outcomes.Age-Friendly Banking should be measured by level of fraud protection (ex. View-only features, activity alerts), account affordability (ex. marginal minimum balance requirement, available short-term low-interest loans), financial planning resources (ex. Retirement planning services, access point to eligible income supports), and services/technology centered around disabilities (staff trained to deal with customers living from dementia, large text on ATMs). The ultimate goal of Age-Friendly Banking outcomes is to improve the knowledge and behavior of older adult financial customers so that they and their trusted advisors can manage their money.
Recommending new financial products, protections, and services – NCRC recommends a number of newer Age-Friendly Banking products and services whichstrengthen the financial well-being of older adults. These products and services include cash withdrawal limits, 24-48 hour transaction holds on unusual purchases, chip and signature debit cards with easy-to-use directional arrows, and yearly benefit screens to identify potential income assistance, housing/utilities and tax relief benefits.Age-Friendly Banking can draw from other services and products including using technology apps to help older adults access banks, such as Go GoGrandparent, a transportation application that helps older adults gain transportation to banks, as well as Scam Squad to protect older adults from financial abuse.
Continuing to engage financial institutions – Another key element of Age-Friendly Banking work is the engagement of financial institutions to encourage them to partner with community-based organizations, and the aging network. NCRC has sponsored annual Age-Friendly Banking Convenings for the past five years and has also designed and conducted nine Innovation Labs with JPMorgan Chase & Co. These convenings and labs provide guidance for Age-Friendly Banking innovative products, protections, and services in order to improve the financial well-being of LMI older adults. Working with state banking associations is a strategic way to broaden the impact of Age-Friendly Banking and reach a larger number of small and regional banks.
Continuing to engage federal and state banking regulators – Federal bank regulators led by the Consumer Financial Protection Bureau have issued a number of important advisory rules and developed materials to promote Age-Friendly Banking and protect older adults. In order to increase regulatory impact, NCRC plans to expand its work to state banking regulators and work with others to identify and change states that limit ability of banks to report financial fraud and abuse designed to protect vulnerable adults.NCRC will work to design measures to resolve state-based limitations to reporting and work with other advocates.
Continue to support local Age-Friendly Banking initiatives – NCRC’s Age-Friendly Banking Toolkit was designed to help grassroots member organizations get started on launching their own local Age-Friendly Banking initiative to provide older adults with the focused products, services and protections that will enable them to thrive. Within the toolkit are various resources that pertain to the steps necessary to conduct a grassroots initiative. NCRC will continue to encourage and support members as they support the vulnerable older adults in their community.

Conclusion

In the six years since NCRC introduced the concept of Age-Friendly Banking, financial institutions have taken strides in protecting the financial well-being of older adults. However, substantial progress in both the expansion and innovation of Age-Friendly Banking services is still needed, especially in reaching vulnerable constituencies, notably people with disabilities and limited English speaking skills. Through sustained collaboration and engagement with community leaders and financial institutions, NCRC hopes to stimulate the continued innovation of Age-Friendly Banking in order to open and expand economic opportunities to economically insecure older adults despite the detrimental policies of the current administration. Keeping older adults independent and healthy in their communities benefits everyone and saves federal, state, and local government resources. A sustained commitment to Age-Friendly Banking practices will provide our rapidly growing older population with the financial infrastructure needed to maintain dignity as they age.

[1] https://www.acl.gov/sites/default/files/Aging%20and%20Disability%20in%20America/2016-Profile.pdf

[2] https://www.bloomberg.com/news/features/2018-05-03/america-s-elderly-are-losing-37-billion-a-year-to-fraud

[3] https://www.huduser.gov/portal/periodicals/em/fall13/highlight2.html

[4] https://www.chase.com/investments/retirement-planning

[5] https://newsroom.bankofamerica.com/press-releases/global-wealth-and-investment-management/bank-america-merrill-lynchs-director

[6] https://www.sec.gov/Archives/edgar/data/72971/000119312509127827/dex991.htm

[7] https://www.tdbank.com/personal/60pluschecking.html#

[8] http://cfefund.org/wp-content/uploads/2017/09/FEC-Eval-Banking-Status-Brief.pdf

[9] http://cfefund.org/wp-content/uploads/2017/09/FEC-Eval-Banking-Status-Brief.pdf

[10] http://cfefund.org/sites/default/files/Bank%20On%202.0%202-pager.pdf

[11] Kell, Christopher. (April, 2015). FDIC San Francisco

[12] https://www.bankaf.com/Personal_Pages/PersonalChecking/AccountSmartTool.aspx