Two-Thirds of Depositors Might Be Missing Out

It’s been difficult to miss the rise of online-only banks. They tend to offer simpler banking solutions and higher interest rates than brick-and-mortar banks, and don’t carry the expensive real estate and headcount costs that often come along with having physical locations.

While these new banks and cash products have grown in popularity, there’s one important group that has been notably reluctant to open one of these new accounts and change with whom they bank: baby boomers. The baby boom generation is responsible for two-thirds of all deposits in the U.S.,¹ yet less than 10% have a digital-only bank account.²

A recent report from product comparison site Finder estimated that only 8.4% of baby boomers have a digital-only bank and a mere 4.4% say they plan to open one in the near future.² Could it be that baby boomers are simply not interested?
While their aversion to banks without a physical presence is clear, that does not mean that baby boomers do not see the value in banking online. Nearly half of baby boomers primarily manage their checking accounts via the web³–numbers on par with Gen X and Millennial consumers. So if baby boomers aren’t averse to online banking, what’s keeping them from switching to an online-only bank?

The baby boom generation is responsible for two-thirds of all deposits in the U.S.,³ yet less than 10% have a digital-only bank account.²

One reason may be loyalty. Many depositors have long-standing relationships with their bank and a recent Gallup poll of baby boomers showed that two-thirds had no plan to switch their primary banking relationship.⁴ More than half of baby boomers (58%) have never switched financial institutions,¹ and, when asked why they don’t currently use digital-only banking, more than 75% of baby boomers answered that they were happy with their current banking institution².

Another may be their communication preferences – especially when it comes to banking. Specifically, they tend to want to be able to visit a branch and speak with someone in person — an option that online-only banks cannot provide by design. In a survey conducted by Novantas,⁵ when asked how they would define ‘convenience’ in relation to banking, baby boomers responded that having branch locations close by is more convenient than online or mobile banking services.

Unfortunately, all of this means that many baby boomers are missing out on a significant amount of innovation in the banking and technology space, including higher interest on their cash. Online banks and cash management accounts can provide significantly higher interest rates than traditional banks can offer. As many baby boomers are entering retirement, higher rates on cash balances can provide an extra boost that they may not otherwise get at a brick-and-mortar bank.

…this means that many baby boomers are missing out on a significant amount of innovation in the banking and technology space, including higher interest on their cash

That is why we built Flourish Cash⁶ to work seamlessly alongside customers’ existing bank accounts. Clients can keep their existing checking That is why we built Flourish Cash⁶ to work seamlessly alongside customers’ existing bank accounts. Flourish Cash is not a bank account, it is a cash management account that links to customers’ existing checking, or even savings, accounts and seamlessly sweeps customers’ cash to our FDIC-member Program Banks.⁷  Customers can continue living their financial lives the way they do today. And while our platform is incredibly easy to use, we also offer premium, white-glove client support via our NYC-based team for when you just want someone to speak to about your cash.

With Flourish Cash, you can get the benefit of competitive interest rates without giving up the conveniences of your current institution — the perfect solution for baby boomers who don’t want to change banks.

Learn more at https://www.flourish.com.

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¹ Kamat, C. (2018, August 22). Don’t forget baby boomers in the race to go digital. American Banker. Retrieved from https://www.americanbanker.com

² Wells-Barrett, C. (2019, October 30). Neobank adoption. Finder. Retrieved from http://www.finder.com

³ Schwanhausser, M. (2019, March 12). How to Serve Baby Boomers’ Unmet Financial Needs. Javelin Strategy. Retrieved from http://www.javelinstrategy.com

⁴ Williams, S. (2015, February 2). For Banks, Baby Boomers Mean Lucrative Business. Gallup. Retrieved from news.gallup.com.

⁵ (2018). 2018 Omni-Channel Shopper Survey: Appealing to the Digital-First Customer. Novantas Research. Retrieved from http://www.consumerbankers.com

⁶ Flourish Cash is a service offered by Stone Ridge Securities LLC, a registered broker-dealer and FINRA member. Stone Ridge Securities LLC is not a bank. If you were introduced or invited to Flourish Cash by a third-party investment adviser or other third party, whose name or logo may be shown above, please be aware that they are not affiliated with Stone Ridge Securities LLC and will not provide any advisory or brokerage services for your Flourish Cash account or have the authority to provide instructions on your account.

⁷ Flourish Cash is not a bank account, but the cash balance in a Flourish Cash account is swept from the brokerage account to deposit account(s) at one or more third-party banks that have agreed to accept deposits from customers of Stone Ridge Securities LLC (“Program Banks”). The cash balance in a Flourish Cash account that is swept to one or more Program Banks is eligible for FDIC insurance, subject to FDIC rules, including FDIC aggregate insurance coverage limits. FDIC insurance will not be provided until the funds arrive at the Program Bank.