Jason Thomas saw his aunt lose thousands of dollars at the hands of some of her caregivers, who would put their own groceries on the credit card they were supposed to use for hers, among other deceptions.
"We looked for something that would allow us insight into financial transactions for ourselves and others involved," said Thomas, but he was unable to find a service that fit the bill.
The fintech he co-founded, myFloc, is one of several that try to help
The number of people in the U.S. aged 65 and older is surging. They accounted for 16.8% of the total U.S. population according to the 2020 census — a significant spike since 2010, when this segment accounted for 13% of the overall U.S. population.
Some fintechs that aim to serve this segment strive to prevent fraud, some through machine learning and other analytics. Others are pivoting their business models and seeking financing for the first time.
Banks are also exploring ways to expand their relationships with retirement-ready customers and retain wealth as it transfers from one generation to the next.
This need is particularly pressing for community banks.
"Community banks tend to have a much higher aging population in their retail base than money-center banks and fintechs do," said Carey Ransom, managing director of BankTech Ventures, a venture capital fund with banks as limited partners. "They are starting to think about how to continue to serve them in a world that is increasingly fraught with fraud and other challenges."
Jilenne Gunther, the national director of AARP's BankSafe Initiative, notes the risk of financial exploitation compounded during the pandemic, partly due to social isolation.
"There is never a meeting I go to with the [banking] industry where they are not talking about fintech solutions with fraud," said Gunther. In particular, she sees interest and innovation in monitoring analytics, such as detecting abnormal account activity, and predictive analytics that could anticipate cognitive decline based on behaviors.
"One of our members' top priorities is preventing fraud," said Gunther.
Charlie, a neobank aimed at people 62 and older, introduced a suite of fraud-prevention tools in November,
In January, American Commerce Bank in Johns Creek, Georgia, announced the launch of
Challenger banks and apps such as Zeta, Onward and Nerve are helping people manage complex financial relationships beyond simple joint accounts.
MyFloc, which was founded in 2019 and started piloting its product in 2022, operates in the same vein of protecting older adults from becoming financial targets. Its product lets people set up an account with a debit card and appoint a "team" of people who can either help manage the account, be restricted to using a myFloc debit card under set limits and with notifications sent to the account owner or view account information only. Pathward Financial, a $7.5 billion-asset bank in Sioux Falls, South Dakota, is its banking-as-a-service provider.
"We're seeing best results when it's used before fraud or exploitation occurs," said Thomas. He finds users also appreciate that sharing information through myFloc doesn't expose their existing or primary financial accounts.
MyFloc has partnerships in the works with banks and credit unions.
"It's not just for those with large financial means," said Thomas. "Those that are hit the hardest by financial exploitation and fraud are those with fewer means."
Venture capital firms have been exploring a variety of fintechs relevant to aging.
"So many financial institutions, whether that be traditional financial institutions or neobanks, are weirdly youth-obsessed," said Dan Kimerling, founder of fintech-focused venture capital firm Deciens. "There are many neobanks for teens and yet there are so few groups focused on helping our aging relatives."
Deciens invests in two companies that address problems plaguing older populations: True Link Financial, which issues prepaid cards that allow for customizable settings and notifications, and receipt scanning and organizing service SimplyWise.
True Link addresses the issue of partial autonomy, points out Kimerling. "The way most financial institutions deal with people is either you have full autonomy or no autonomy at all," he said. "That doesn't make a lot of sense." SimplyWise is not exclusively focused on aging populations, but Kimerling knows it's a substantial use case for the many small businesses owned by older Americans who need help with the logistics of running their companies.
Banks are also concerned with holding onto wealth as younger generations inherit it.
"One thing banks can do now to engage with aging customers is to help them in those planning discussions," said Ransom. "We're seeing an increased interest in areas like wealth planning because that is a way to help existing customers and connect them to the likely next generation."
Primetime Partners is an early-stage venture capital fund that incubates and invests in firms focusing on improving the lives of older adults. Fintechs in its portfolio include Empathy, a technology platform for end-of-life planning; Aidaly, which helps family caregivers explore their eligibility for compensation; small-business 401(k) platform Penelope; and more.
"Banks are starting to look at the whole person," said Primetime managing partner Abby Levy. "They are realizing that health care is what keeps their clients up at night." She sees potential for banks to help guide their customers into the right Medicare plans, grapple with decisions around long-term care and aging in place and more.
She also sees opportunities for banks to help their customers "de-cumulate" assets wisely. "The whole industry is organized around asset accumulation," said Levy. "This notion of de-cumulation is not front and center." One portfolio company, Retirable, helps users spend down their retirement savings in alignment with their lifestyles. It includes a high-yield cash management account that lets retirees manage distributions, cash flows and spending while sweeping their unused monthly retirement income into emergency savings.
Silvur is another aging-related fintech that focuses on those thinking about retirement.
"Our consumers are independent, financially literate and able," said Rhian Horgan, the founder and CEO of Silvur. "They just have massive decisions they need to make and be guided through them." Silvur creates white-labeled products that financial institutions can host on their websites, or embed in their mobile banking apps through providers Jack Henry and Alkami. Users get a feed of written content personalized to their situation, such as their marital status and retirement age. The product also churns out a "retirement score" that calculates how long retirement savings will last.
Horgan pivoted Silvur to a purely business-to-business-to-consumer company two years ago, doing away with a direct-to-consumer component. "It was all about trust," she said. "We found this age demographic wanted to make these big decisions with financial institutions who had been around a long time."
Silvur has a dozen bank and credit union partners. One is Michigan State University Federal Credit Union in East Lansing, Michigan, which has embedded Silvur on its website and will be doing the same on its mobile app in 2024. Sara Dolan, chief financial officer of the $7.7 billion-asset credit union, says Silvur helps members feel more confident about their retirement outcomes and aligns well with the institution's mission around improving financial wellness.
It also helps MSUFCU deepen engagement with these members.
"Silvur has provided us with a dataset that complements the data in our core and really helps us understand member buying behavior," said Dolan. "Our goal at MSUFCU is to ensure that members see us as the trusted financial institution for their full retirement wallet."
