Younger generations at serious risk of digital and financial exclusion

A new report published today by Virgin Money and WPI Economics, Tackling the barriers to digital and financial inclusion: exploring the generational experience, finds that addressing exclusion remains critical for the UK, particularly given that so-called ‘digital natives’ are no more protected from the impacts of exclusion than older generations.

Key findings include:

• Gen-Z survey respondents were more than twice as likely as Millennials to experience both digital and financial exclusion (7% compared to 3%).
• Gen-Z is the least likely group surveyed to be confident using the internet to manage their finances: 68% compared to 74% of Millennials and 77% of the older generations.
• 47% of Gen-Z respondents said they had low confidence in money management or using financial products: only 17% of respondents from older generations said this was the case for them.

In addition to the findings outlined above, Gen-Z were also found to be the generation most likely to be victim to a scam – 29% of those surveyed compared to only 13% of older generations – despite expressing high confidence in being able to spot signs of scams (around 70% for all generations).

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 surveyed 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. Today’s 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.