Several institutions have stepped up efforts to bank seniors, even as millennials dominate headlines tied to industry innovation.
Windsor Federal Savings in Connecticut and First Midwest Bancorp in Itasca, Ill., are among the banks testing out ways to offer more products and services to older customers.
Banks, in many instances, are simply looking to serve their aging customers.
There are other reasons to market to senior citizens. Though they tend to have less debt than younger customers, seniors are usually a better credit risk. The median Vantage score for borrowers in their 60s and 70s approached 650 in 2014, compared with less than 550 for those in their 20s, based on data compiled by the Urban Institute.
Older customers also tend to be a solid source of deposits, which should have greater importance as interest rates rise.
“Certainly the lifeblood of a bank is its deposit base, so I think it makes a whole lot of sense” to focus on groups that can supply such liquidity, said John Rodis, an analyst at FIG Partners. “There a lot of competition … so going outside the box a little bit makes a whole lot of sense.”
Banks have differing approaches when it comes to working with seniors.
The $455 million-asset Windsor has opened branches in two senior facilities in nearby Bloomfield, Conn. Each branch, staffed by one employee, is open for six hours twice a week.
The branches provide “a little bit of everything,” said George Hermann, Windsor’s CEO, including checking and savings accounts, wire transfers and deposits. Residents who need a safety deposit box can visit a Windsor branch that is less than five miles away.
“The opportunity was there,” Hermann said. “We’ve always had a very strong presence in the senior community, so this was a natural for us.”
Windsor has also helped some senior customers set up accounts with their children. It also banks some of the senior communities’ employees.
The typical type of debt for seniors is credit cards; more than 70% of people between 63 and 77 have a card balance, according to the Urban Institute. Less than 30% have a mortgage, while a quarter have an auto loan. Roughly a tenth of seniors have some form of home-equity loan.
Credit cards are an area ripe for fraud. Roughly 1.3 billion people 65 or older were the victims of credit card identity theft in 2012, based on the most recent data from the Bureau of Justice Statistics.
That provides an opportunity for banks to step in and help seniors avoid being scammed.
The $14 billion-asset First Midwest conducts senior programs at one of its main Chicago branches. The bank brings in experts, including representatives for the Illinois State Treasurer and AARP, to discuss topics relevant to seniors.
The program, held on the third of every month to coincide with the time many seniors get their government deposits, averages more than 100 attendees per session, said spokesman Jim Roolf. Bank customers and outsiders are welcome to participate.
“Clients … look forward to it,” Roolf said.
The program was launched in August 2015 after Elaine Bellis, an organizer at the Northwest Side Housing Center, approached Josie Pacheco, the branch’s manager, about offering more events for seniors.
“It was a perfect fit,” Pacheco said, noting that the program has speakers booked through the fall. Getting information out to seniors can be a chore, since many of them take public transportation — or walk — to attend the sessions.
First Midwest offers coffee and sometimes has vendors bring in items such as fruit.
“It’s all about appreciation for my senior clients,” Pacheco said.
Food also plays a role at Windsor, but with a twist — Hermann joked that one of his tellers had gained several pounds from all the baked goods customers had been bringing to the branch.
First Midwest, meanwhile, has expanded its efforts to include a financial-wellness fair in Hammond, Ind., where it works with community groups to provide services, including tax preparation, to seniors.
“It makes sense to continue looking … to provide those types of educational programs,” Roolf said.
While community programs can help First Midwest earn credit under the Community Reinvestment Act, Roolf said the company would offer the programs even that perk didn’t exist.
“It’s just good business to be engaged in the community, and this is one of those engagement elements,” he said.