New research1 released today reveals that Gen-Z is the age group most likely to be digitally and financially excluded, with calls for Government to create a new Taskforce to ensure exclusion is tackled across all ages.
Key findings include:
- Gen-Z were more than twice as likely as Millennials to experience both digital and financial exclusion (7% compared to 3%).
- Gen-Z is the least confident generation in using the internet to manage their finances: 68% compared to 74% of Millennials and 77% of the older generations.
- 47% of Gen-Z said they had low confidence in money management or using financial products: only 17% of older generations said this was the case for them.
The new report published today by Virgin Money and WPI Economics, Tackling the barriers to digital and financial exclusion: exploring the generational experience Link opens in a new window, finds that tackling financial and digital exclusion remains critical for the UK, particularly given that so-called ‘digital natives’ are no more protected from the impacts than older generations.
The report also finds that Gen-Z is the most at risk of falling for scams - 29% have been victims, compared to only 13% of older generations - despite expressing high confidence in being able to spot signs of scams (around 70% for all generations). This younger group is also the least likely to know what to do if they think they have been scammed (65% compared to 69% of older generations) and the least likely to follow safe online practices.
Raymond Pettitt, director of customer service and operations at Virgin Money, said: “This research busts the myth that younger generations are immune from digital and financial exclusion.
“In reality, Gen-Z is falling through the cracks and unless the Government acts swiftly in partnership with the banking industry and the third sector to create a unified approach to tackling this, we risk leaving a whole generation behind.”
Just over two-thirds (70%) of respondents would like more help and support to make financial decisions. Around two-thirds (68%) also believe that banks and building societies should be doing more to help their customers make the right financial choices and a similar proportion (66%) think that the Government should be doing more. A quarter (25%) also wanted help in boosting their digital skills so they can be more confident in managing their finances online.
The research started from the basis of assuming some digital and financial capabilities, given detailed research already done on the most extreme forms of digital and financial exclusion.2 Despite this, 5% of adults did not have access to a current account, almost a quarter (24%) did not have access to savings and almost a third (31%) did not have access to a credit card.
The report estimates that:
- Unbanked households face an additional £645 million per year in higher household bill costs.3
- As well as directly felt financial costs, there are significant wellbeing impacts from digital exclusion to the value of £16.9 billion per year.4
- Digital and financial exclusion could lead to an additional 633,000 scam victims each year, resulting in an additional £568 million stolen from consumers annually.5
The report finds that it is not the case that consumers simply require more knowledge or skills – a series of changes are needed across the system that together can reduce the impacts on individuals, society and the Exchequer. The report makes four key recommendations:
- The Government should create a Financial and Digital Inclusion Taskforce made up of policy makers, industry and the third sector, charged with overseeing the seamless delivery of the shared areas of focus for the new Financial Inclusion Strategy and Digital Inclusion Action Plan in support of the Government’s growth mission.
- The Financial Inclusion Strategy must be genuinely inclusive for all ages and take a life-long approach.
- The financial services industry should – under the guidance of the Financial and Digital Inclusion Taskforce – develop a new channel of choice charter, so that consumers can access the support they need offline as well as online.
- The Government should set a target of becoming the highest-ranking European country in the Global Financial Inclusion Index, so that the UK can benefit from increased financial inclusion and growth.
Virgin Money remains focused on addressing these issues. It is the only bank working with the National Databank to offer free SIM cards in its branches to those facing data poverty. In addition, it’s funding through the Virgin Money Foundation has delivered £3 million in grants to community-led organisations promoting digital inclusion.
Notes to Editors
1 The research included a survey on the different experiences of Gen-Z (aged 16-28 years), Millennials (aged 29-44 years) and older generations (aged 45+ years), as well as 12–15-year-olds. The sample for the survey covered: 1,000 16+ Gen-Z, 1,000 Millennials, 1,000 “older” generations and a boost of 500 Scottish respondents. A second survey centred on the experiences of 250 12–15-year-olds.
2 The impacts of digital and financial exclusion can be devastating, particularly where people cannot access the services they need. For more information on the impacts of total exclusion not covered in this report, please see previous work by the Financial Conduct Authority Link opens in a new window and the Financial Inclusion Commission Link opens in a new window on financial exclusion, and on digital exclusion by the Digital Poverty Alliance Link opens in a new window and Good Things Foundation. Link opens in a new window
3 There are an estimated 1.1 million households that do not have access to a bank account. Households without access to a bank account face additional costs when paying bills and everyday expenses, as they are unable to access better rates and payment plans. It is estimated that the annual cost due to higher bill payments of not having a bank account is £598 per household per year, which means that unbanked households face an additional £645 million per year in household bill costs. Full sources for this data are included in the research report.
4 Wellbeing impacts are calculated by estimating the difference in wellbeing between people who are digitally excluded and people who are not digitally excluded, estimating the number of people who are digitally excluded and assigning value to the difference in wellbeing based on the Treasury’s valuation of a WELLBY in the Green Book. More detail on wellbeing and the Green Book can be found in Annex 3 of the research report. Link opens in a new window
5 The survey finds that people are more likely to have been the victim of a financial scam if they are digitally excluded (33% have been victims), financially excluded (40%) or both digitally and financially excluded (44%) than if they are not excluded (27%). This means that digital and financial exclusion is associated with an additional 633,000 scam victims each year. Based on an estimated average amount stolen per fraud case of £897, digital and financial exclusion results in an additional £568 million stolen from consumers through scams every year. Full sources for this data are included in the research report.