Job not done: Londoners most at risk of experiencing both digital and financial exclusion

New analysis released today reveals that Londoners run the highest risk of experiencing both digital and financial exclusion in England, with 40% lacking confidence in money management.

Key findings include:

• Londoners are more than twice as likely to experience both digital and financial exclusion than those living in the South East (5% compared to 2%).
• 1 in 4 Londoners say they have very low knowledge of financial matters (26% compared to 18% UK average).
• Londoners report higher levels of difficulty using current accounts, overdrafts, online savings and credit cards compared to the rest of the UK despite reporting higher confidence in their digital skills.
• Along with those living in the North East, Londoners are jointly most likely to say they have been victims of an online scam (26% compared to 19% UK average).
• Those living in Greater London are also the most likely in England to want help and support to make financial decisions (78% compared to 70% UK average).

This new analysis from Virgin Money and WPI Economics finds that tackling financial and digital exclusion remains critical for the Capital, particularly given the wider findings of the research that show that so-called ‘digital natives’ are no more protected from the impacts than older generations.

The analysis also finds that 37% of Londoners want help boosting their digital skills to be more confident online compared to 25% across the UK. Londoners were also the most worried about being a victim of an online financial scam or fraud, with close to 6 in 10 (56%) expressing concern. This is despite 7 in 10 Londoners saying they are confident in recognising an online scam.

These new findings follow the publication of the UK-wide report, Tackling the barriers to digital and financial inclusion: exploring the generational experience, which 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.

Matthew Oakley, Founder and Director of WPI Economics said: “Despite London’s reputation as a financial powerhouse, Londoners are amongst the most at risk of online scams, and the least confident in knowing what to do if they are scammed.

“With ever more sophisticated online scams many people, including Gen Zs, are worried that they don’t know where to go for help. That is why it is important for the Government, industry and education providers to work together to create lifelong approach to supporting people in managing money safely and effectively online.”

Raymond Pettitt, director of customer service and operations at Virgin Money, said of the full report: “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.”

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, 4% of Londoners surveyed did not have access to a current account, more than 1 in 5 (21%) did not have access to savings and almost 1 in 3 (28%) did not have access to a credit card.

The report finds that it is not the case that people simply require more knowledge or skills – a series of changes are needed across the system and across the country 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 to editors

The research included a survey on the different experiences of 3,000 people across the UK, with 448 of those surveyed resident in the Greater London area. The additional analysis can be found here.

^* 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.

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, its funding through the Virgin Money Foundation has delivered £3 million in grants to community-led organisations promoting digital inclusion.