I worked with a large international banks for nearly 20 years and consider myself incredibly lucky – almost every day I was eager to go to work. That said, there were no end of challenges and a fair few frustrations, but they were there to be worked through and sorted out. One reason for this great work environment was that we were fortunate to have a series of inspirational Chairmen. People who saw their role as delivering long term success – and for them long term meant a 25 year horizon.
It was their ‘blue skies’ thinking that introduced me to longevity. Part of their strategic planning process involved consideration of global structural change and this provided early warning of a number of developments including international call-centres, the rise of electronic banking and the impact of increased customer life expectancy. In each case they were right – the developments changed our industry (and many others as well!).
While accurate foresight proved a competitive advantage it was no guarantee of success. We developed call centres across Asia that tracked the sun around the world; they served customers 23 hours a day – efficient – brilliant – but the competition set up next door. On-line banking ‘firsts’ rapidly became an industry standard and the race is now on to remove bricks, mortar and paper from all our financial lives.
Early thoughts on longevity were also soon outdated. Initially we believed living longer meant a lengthy retirement and that would require greater savings – how wrong we were! Living longer is certainly changing customer lives and these in turn have created new demands on the banks – just not the ones we anticipated. Here are a few:
Living longer left pension schemes paying out for longer with the employers footing an open-ended top up bill. As a result almost all defined benefit pension schemes have now closed to new members, and many have shut all together. Rather than spending longer in retirement typical bank customers no longer have the means of retirement.
Today’s school leavers face the prospect of a 70 year working life. State retirement age is rapidly approaching 70 and is now linked to increases in life expectancy. This generation will need to return to school at different stages of their working lives to update their skills.
Buying a home is increasingly a mid-life activity. The age of first-time buyers continues to increase. The UK average is nearing 40 with London first time buyers nearing 45! If you can get the kids out of the family home by the age of 30 you are doing well!
Internet banking has proved convenient and popular with customers and cost effective for banks. However the fraudsters and scammers have also found rich pickings. Change creates new opportunities for all
Living longer is an amazing opportunity and a major challenge. The more you know – the better equipped you’ll be – EML can help.