Job not done: younger generations at serious risk of digital and financial exclusion

New research released today reveals that Gen-Z is the age group most likely to be digitally and financially excluded, and 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 inclusion: exploring the generational experience, 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. 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.
• As well as directly felt financial costs, there are significant wellbeing impacts from digital exclusion to the value of £16.9 billion per year.
• 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.

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:

1. 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.
2. The Financial Inclusion Strategy must be genuinely inclusive for all ages and take a life-long approach.
3. 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.
4. 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.

Notes:

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.

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 and the Financial Inclusion Commission on financial exclusion, and on digital exclusion by the Digital Poverty Alliance and Good Things Foundation.

The full report is available here.

About Virgin Money: 

Virgin Money has 6.6m retail and business customers across the UK, bringing the best of the Virgin brand to make banking better and enable customers to achieve their financial goals. As part of the Nationwide Building Society since October 2024, Virgin Money is a purpose-led organisation offering a range of straightforward, award-winning products including current accounts, credit cards, savings, investments, mortgages, pensions, loans and more. Rewarding customer experiences are delivered through its digital channels, branches, contact centres and relationship managers. Through the Virgin Money Foundation and key partnerships, the bank also delivers positive change in society as part of its progressive sustainability and ESG agenda. An inclusive and ambitious culture encourages c.7,000 FTE colleagues to work in a healthy, flexible, digitally-led environment. It is headquartered in Glasgow with major offices in Newcastle upon Tyne and London, and since 2019, Clydesdale Bank and Yorkshire Bank have been rebranded as Virgin Money.