Imagine being in your 70s or 80s and unable to find a suitable bank tailored to your specific needs, with specialised services such as healthcare services, retirement plans, etc. Wouldn’t that make you feel grumpy? This is the situation Japan is facing right now. With elderly customers representing a rapidly growing segment of the market, companies are reimagining their products and the services they offer to meet the exclusive and changing needs of the demographic. This scenario is not only limited to Japan; China also suffers from the same fate.
Changing Demographics
As of 2024, Japan has the oldest population in the world, with 21.9%, or 3.6 million, of the country’s citizens aged 65 or older. China is also not far behind. As of 2024, around 12% of its population lives at or over the age of 65, which can be attributed to the decade-long one-child policy implemented in China. However, in China’s case, this problem will only go up in the future. It is estimated that by 2030, China’s old-age population percentage will reach around 28%. This has prompted the financial sector of China to make some immediate changes and to shift its focus to services and products that cater to the needs of the old people. For instance, rather than centring their services around salary accounts, financial institutions in the country focus on old age things like healthcare plans, retirement plans and pension services.
In Japan, their are many companies like Sumitomo Mitsui Banking Corporation (SMBC) that already offer financial solutions for older adults. For example, SMBC has introduced simplified banking interfaces, like senior-friendly ATMs with larger fonts and more intuitive controls. Similarly, reverse mortgages are introduced where elderly homeowners can borrow against the value of their homes. Companies like ORIX, a financial services group, saw a 15% annual increase in reverse mortgage loans in 2022 alone.
China’s ageing crisis is even more profound due to its massive population. 12% of the Chinese population represents 140 million people, which is the highest in the world in terms of number of people above 65. With fewer working-age individuals supporting the growing number of retirees, the country’s pension system is under immense strain. In response, Chinese financial institutions are innovating aggressively to create private pension products. In 2022, the government introduced the country’s first private pension pilot program, which saw robust growth, reaching 60 million participants by the end of 2023. Major Chinese insurance companies like Ping An Insurance are designing hybrid life insurance and healthcare packages tailored to the needs of the elderly. These packages focus on long-term care insurance, addressing the high costs of elder healthcare, and it is expected to become a $1.3 trillion package by 2030.
Technology’s Impact on Financial Adaption
Just like in pretty much every other field, technology can play a huge role here. Japan and China are leading the way in digital financial literacy for older adults, developing solutions that are both accessible and easy to use. For Instance, in Japan, SoftBank has been promoting the use of smartphones among seniors, encouraging them to use apps that simplify banking, bill payments, and even investment. SoftBank’s financial arm launched a program specifically designed to educate seniors about secure online banking practices, reflecting a broader trend toward digitisation. Moreover, they are striving to make their services and apps elder-friendly by making them intuitive.
On the other hand, China is equally aggressive in promoting tech-based financial solutions for the elderly. The rise of mobile payment platforms such as Alipay and WeChat Pay among older generations has been facilitated by user-friendly features of these apps, such as voice commands and facial recognition, which makes the whole process much easier while keeping it secure. In 2023, Ant Group reported that over 25 million people over 60 were using Alipay to manage their daily finances, marking a 30% increase compared to the previous year. This ensures that elderly people also enjoy the same benefits as their younger counterparts.
What Does The Future Hold
The future of financial services in ageing economies is optimistic. Financial institutions in Japan and China will likely continue evolving their products and services to keep pace with the demographic shifts they are witnessing. Experts predict a rise in health-linked financial products, like wellness-linked insurance policies that reward healthy behaviour with lower premiums. There is also a growing demand for eldercare savings plans, where individuals can save for future caregiving needs, a sector projected to grow by 18% annually in China through 2030.
Moreover, the digital transformation of financial services will continue to be crucial in empowering elderly customers. In Japan, the integration of artificial intelligence (AI) in wealth management has become a trend, while in China, blockchain technology is being explored to offer secure, transparent pension management systems to the masses. These advancements are expected to become even more important as both countries’ populations continue to age.
