It’s high time we embrace age-friendly banking

By Ricardo Herrera, Head of the Consumer Protection and Specialized Projects Division, Superintendency of Banks of the Dominican Republic.

Altagracia Santana is 73 years old and lives in a small town in the Dominican Republic. She worked as a janitor for two decades but lost her job five years ago. After failing to qualify for a pension, she decided to start her own business, making and selling food from her home.

With profits from her small food enterprise, Altagracia can support herself and pay for her granddaughter’s university studies. After several financial institutions denied her access to credit due to her age, Altagracia had no choice but to borrow US$5,000 from an informal lender to expand her business. As a result, she is paying steep monthly interest that eats into her profit.

Altagracia used to have a smartphone but struggled to understand the bank’s payment application. When a technological error prevented her from making a mobile payment to a food supplier, she asked the bank for assistance but received a poor response.

Ageism in the financial services sector

Sadly, Altagracia’s story is typical. Many older people in the Dominican Republic have difficulty accessing credit and using digital products and services. Despite there being no legal restrictions to applying for loans from banks, some financial institutions establish age limits in their internal policies that prevent them from granting loans to customers over the age of 70 years. A survey conducted in 2022 revealed that almost 30 percent of respondents over the age of 65 admitted to finding it challenging to access financial products due to their age. In the Dominican Republic, a person over the age of 65 is legally considered to be “aged”.

Ageism in the financial services sector is not unique to the Dominican Republic. A 2017 report by the Financial Conduct Authority highlighted that older people in the United Kingdom regularly fall victim to age discrimination in the sector. Banks consider age to be a risk factor and often refuse to provide products to certain age groups.

Around the world, policymakers and regulators could do much more to protect older people’s rights, including their access to financial products and services. In Mexico for example,  the National Commission for the Protection and Defense of Users of Financial Services and the Association of Banks of Mexico have formulated an agreement to improve older people’s access to, and use of, banking services. Similarly, AFI’s 2021 publication Integrating Vulnerable Groups in National Financial Education Programs and Strategies spotlights Costa Rica’s National Policy on Aging and Old Age, which seeks to improve older people’s quality of life, combat social exclusion, reduce hunger and poverty, and guarantee protection and social security.

But these are exceptions to the rule. In too many countries, the needs of older people, including their ability to access vital credit and services, are not getting the attention they deserve, resulting in their financial exclusion.

Bringing our elderly in from the cold is not only possible but also beneficial

Solutions exist, but they require a change of mindset. The issue of age discrimination in loan granting, for instance, could be addressed by financial institutions ensuring that customers’ risk profiles are thoroughly assessed to consider a broader range of factors besides just their age.

Equally, in our rapidly digitizing world, we can ensure older people are not left behind by designing new financial products and services that consider their unique needs, for instance with interfaces that are easy to use and understand.

Promoting financial literacy and creating a culture of saving are all essential elements in preparing populations for old age. Financial education and literacy programs can prepare the elderly with the necessary know-how and skills to choose and make use of financial products and services appropriate to their needs and economic capacity.  Additionally, populations should be made aware of the importance of saving from a young age. This could help encourage long-term saving – an essential part of asset management throughout life.

This is a responsibility that lies on everyone’s shoulders, but by doing their part, financial service providers, regulators, and policymakers can help ease the burden of growing old, while sustaining economic activity among elderly sectors of the population.

Here in the Dominican Republic, life expectancy is on track to reach 79 by 2030, up from 74 in 2020. Older people represent a fast-growing, vital, and vibrant part of our society. Regulators and financial service providers alike have a whole lot to gain from protecting this sector and prioritizing their financial inclusion.