China is one of the most rapidly ageing countries in the world. As of 2010, approximately 12.4% percent of the country’s population was aged 60 or above. That percentage is projected to reach 28 percent by 2040 (WHO, 2015). And while it took France 115 years, Sweden 85 years and the United States 69 years for the percentage of their population aged 60 and over to double from 7 percent to 14 percent, China needed only 34 years (United Nations, 2015).

While increasing longevity is to be celebrated as an achievement, governments and societies are less prepared for the challenges associated with ageing. In rural areas of China, where health and care infrastructure are limited, the population is ageing more quickly than in urban areas and many elderly communities are at risk of exclusion. Steady rural-to-urban migration among younger Chinese means that traditional care arrangements, such as children caring for parents, are no longer practical. Older Chinese face financial challenges as they stretch their life savings to meet expenses when their income declines or ends, cope with health care expenses and keep pace with China’s digital revolution.

This report explores the financial lives of older people in China and summarizes key findings from secondary research and UNCDF’s primary research in Yangzhou and Guangdong Province. The financial sector, including financial institutions, insurance companies, fintech companies, policymakers and regulators, could benefit from the report’s insights and apply them to the design and delivery of interventions that improve the financial health of China’s elderly.

Key findings

1. Older adults face the challenge of living on savings that are depleted over time. As people age and become more reliant on pensions, they confront new age-related expenses. This creates opportunities for the financial sector to design and deliver tailored financial products and services, such as savings, credit and liquid investments, and help prepare people for ageing.

What can work: Low-risk, liquid investment products could meet the liquidity preferences of older customers, while helping them grow their money. This would help them smooth consumption as they age. China’s CITIC Bank offers low-risk savings and investment products to its older customers that are designed with their preferences and attitudes toward money in mind. By designing products that provide flexible entry and exit points, CITIC appealed to the older demographic, who tend to be more risk-averse and seek highly liquid, interest-bearing products. Their mindfully crafted financial services also helped CITIC grow its customer base. At the end of October 2019, CITIC Bank had 12.64 million elderly customers and 1.04 trillion RMB in assets under management (AUM), accounting for 52.62 percent of total retail AUM.

2. China’s elderly face an increased risk of chronic diseases, which result in high health care expenditures. While China has expanded public insurance schemes, those programmes remain inadequate. Financial institutions could leverage data to offer relevant and patient-centred services including one-stop solutions that combine digital platforms, financial and health care services.

What can work: Using big data approaches to build digital health models for users can make different health options available to older adults. For instance, WeDoctor, a digital health platform, uses big data from commercial insurance companies to build innovative products and customized insurance solutions. Expanding the model could help users access other health services including prevention, medical treatment, payments, and rehabilitation costs. Banks like China’s Construction Bank and Citic offer bundled solutions for their older customers. Construction Bank’s mobile banking app allows older customers to book appointments to tour nursing homes and Bank of China offers health education through its “online university for seniors” on its mobile banking app.

3. China’s elderly, like seniors elsewhere in the world, struggle with digital financial services (DFS). Trust is often a factor. Lack of digital literacy compounds the problem, leading to financial abuse and fraud, particularly among older adults. However, given China’s significant strides into the digital age, older people are increasingly embracing DFS, although within a narrow range of services. This offers the financial and non- financial sectors an opportunity to use physical and digital elements in designing and delivering age-appropriate products and services.

What can work: Some banks are leading the way in designing digital and physical services tailored for the elderly. Shanghai bank, for instance, uses a simple, intuitive mobile banking interface that features more graphics than text and a simpler navigational structure. Its one-touch click-to-call feature also allows older customers to access staff support from employees who speak multiple Chinese dialects. In an effort to cater to the elderly’s specific needs, in 2020, BOC launched a special section for elderly customers on its mobile banking app with three functional areas: wealth management, quality of life, and Bank of China university for seniors. On the physical services front, CITIC bank offers an early example of an elderly-friendly approach. In 2012, it modified more than 1000 of its branches to better serve older customers.