The Great Wealth Transfer: How Financial Institutions Can Seize This Opportunity

Today’s financial institutions face fierce competition from digital banks — fintechs operating solely through online and mobile branches. This need to modernize to compete becomes even more evident when younger generations (Gen Z and Millennials) are more inclined to do business with digital-only banks.

At the same time, it has never been a better time to attract these generations. The Great Wealth Transfer is upon us, which means $84 trillion in assets will be passed on to heirs, primarily Generation X, Millennials, and Gen Z. This is where financial institutions can shine in the inheritance process by offering outstanding services and attracting these incoming younger clients.

In fact, this opportunity goes beyond diversifying their client base. Ribbon’s internal studies found that, in the case of institutions like credit unions, around one-third of their assets under management (AUM) exist among clients aged 65 years or older — a major liability for an institution’s financial stability in the near future.

However, inheritance transfers are currently less than ideal. While larger banks have updated their infrastructure to create digital centers dedicated to this process, most financial institutions have struggled to move this process outside branches and into people’s smartphones and laptops.

Thankfully, technology has evolved enough for financial institutions like credit unions to adopt digital approaches, setting them up to compete and attract younger clients. Let’s see what inheritance transfers look like today and what’s in store for them thanks to technology.

An Overview of the Inheritance Transfer Process

Today’s heirs are users who either grew up with smartphones in their hands or became accustomed to them as teens or young adults. As a result, they prefer digital-first banking approaches that prioritize the user experience, 24/7 support, and connecting with their banks from anywhere. The current inheritance process looks nothing like this.

To set the scene, credit unions currently require inheritors to fill out endless paper forms and provide physical documentation at branches or through the mail. As most incoming heirs are of working age, this process turns into an impossible feat trying to find time to visit locations and revisit whenever staff need to revise these documents. Thus, inheritance transfers are unnecessarily elongated and strenuous, especially at a time when inheritors might want to step back to grieve their loved ones.

Consequently, it’s no surprise they might want to look elsewhere for more digital solutions once the process is over. If financial institutions wish to retain these new prospects and their deposits, they must look to digitize their offering, prioritizing inheritance transfers.

Harnessing Technology To Attract Younger Generations

Fintechs are making it their mission to offer seamless solutions so that financial institutions can step into the future — inheritance transfers included.

So, platforms offering these services allow banks to process digital paperwork that is quickly verified by AI tools, which analyze the smallest details for authenticity and validity. As such, inheritors can upload the needed documentation — forms, IDs, death certificates, and other legal documents — from anywhere they want and in a matter of minutes. Once staff have received and checked these documents, they can communicate with heirs through this platform, whether to notify them of missing information or inform them about the next steps.

Now, a process that used to last up to 12 months can take as little as two weeks to complete. This timeline is, without a doubt, the most ideal for someone undergoing a hard situation. 

Offering such a frictionless process gives inheritors a glimpse into how the financial institution operates. This ultimately serves as a lead generator of sorts, where the success of this process converts inheritors into new clients.

A Win-Win For Clients and Financial Institutions

Changing anything from in-person to digital might seem like an overwhelming and time-consuming project — but it doesn’t have to be that way. Technological advancements have turned digital transformation into a painless process for everyone thanks to services like the cloud and SaaS models.

Fintechs offering digital services to financial institutions are aware of the hardships of adoption, which is why they ensure their platforms are user-friendly, visually appealing, and operate in a straightforward manner. So, even if staff aren’t the most tech-savvy, they will be able to easily adjust to these programs quickly. As a result, they will be able to finish a lengthy transfer in record-breaking time, freeing up their agenda to focus on other critical tasks.

At the same time, inheritors will see more value beyond avoiding trips to a branch. Inheritance platforms simplify the validation process to the point where heirs won’t need to resort to legal assistance to finish it. This is a significant saving of time and money as additional services won’t be necessary for the inheritance transfer to succeed.

Financial institutions can effortlessly seize the opportunities that the great wealth transfer will bestow on them for the next two decades. A digital inheritance transfer translates into quicker processing from staff and less frustration from inheritors, attracting them to stay rather than take their deposits to larger or digital banks. In the end, these institutions can appeal to younger generations by turning a difficult time into a pleasant and streamlined experience.