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The Gray Area within Online Financial Services, Part 2

By Paul J. Mulligan

Last week, I began this 2-part essay by pointing out that adults over 50 are estimated to control 80% of all financial assets in the United States. Yet, most financial services firms-while often working hard to attract these persons via their offline channels--have done little to accommodate this market segment with their online initiatives.

I suggested that replacing personal computers as the primary device for accessing the internet with access devices that persons over 50 are more comfortable using, like interactive television (iTV), might perhaps attract more of this market segment online. However, alternative access devices alone will not cause persons over 50 to adopt the internet en masse. To attract this desirable market segment, financial services firms must also think through some operational issues surrounding their online initiatives, particularly issues about consumers' privacy and security.

According to the Pew Internet & American Life Project, 67% of Americans between the ages of 50 and 64 years are "very concerned" about businesses they don't know getting information about them or their families over the internet. Similarly, a national survey conducted by AARP found nearly 8 out of 10 internet users (77%) age 45 years or older, regardless of their income, education or gender, are concerned about their internet activities being tracked without their permission.

In addition to concerns about their privacy being compromised, older internet users are also less convinced that they have the same legal protection with their online activities as they as they have in the physical world. For example, the AARP survey found 52% of internet users over 45 year of age felt they would have less legal protection by using electronic contracts rather than paper-based documents.

Far from being the "phobic perceptions of senile, old coots" (as a 24 year-old website designer felt obliged to tell me), these concerns by older Americans are quite legitimate. Sure, the United States has passed legislation regarding consumers' online privacy and security rights. But, this legislation is, as of yet, unsupported by any case law. And, as any litigation attorney will tell you, legislation without case law amounts to little more than words waiting to be interpreted.

Accordingly, if a financial services firm wants to attract this market segment in control of 80% of the financial assets with their online initiatives, they will have to demonstrate that the governance of their online privacy and security policies go beyond displaying the seal of some internet security provider.

Such stringent self-governance, I realize, is more easily said than done. However, if you are one of those firms basing your current website developments on market forecasts projecting 40% of all Americans will pay their bills online by 2013 or the like, you should consider this: In 10 short years, the first of the baby boomers will be 65 years old. By 2030, 20% of US citizens will be 65 years young. I don't see any gray area here. Developing websites that accommodate the aging American population seems fairly black and white to me. Shareholders-most of whom are 45 years or older-prefer black and white to red.

Click here to read part one of this article.

Paul J. Mulligan wrote eMarketer's eInvesting Report, which examines the state of the online investment services industry and outlines the challenges and opportunities before it. eMail him with comments, questions, and suggestions at

First published on 6/18/01

First published on 06/18/2001

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