Tackling the barriers to financial and digital inclusion in Scotland

A new report published today by Virgin Money and WPI Economics, Tackling the barriers to financial and digital inclusion in Scotland, highlights the significant impact that digital and financial exclusion is having on the Scottish economy.

Key findings include:

• Digital exclusion impacts wellbeing in Scotland to the value of £1.2 billion annually.
• Unbanked households pay £62 million more in bills per year.
• Digital and financial exclusion causes 36,000 additional scams each year, costing £32 million.

The report also finds that so-called ‘digital natives’ are no more protected from the impacts of digital and financial exclusion than older generations. In Scotland, Gen-Z adults (14%) and older generations (14%) are almost three times more likely to experience digital or financial exclusion than millennials (5%). Alarmingly, half of Gen-Z respondents (50%) also stated they have very low confidence in money management or using financial products.

The research also reveals considerable concern about scams across Scotland:

• 70% of Scottish adults surveyed said they were worried about the sophistication of scams.
• 50% of scam victims reported worsening mental health as a result of being targeted by scammers. 46% stated that being targeted has made them less likely to access financial services online as a result.
• 36% of Gen-Z say they have been scammed compared to 19% of older generations. Gen-Z is also the generation least likely to be confident in avoiding scams: 66% compared to 79% of Millennials and 73% of older generations.

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 these negative impacts. The report makes three key recommendations for Scotland, which build on the recommendations made for the UK as a whole. These centre on the actions the Scottish Government can take to bolster levels of financial and digital inclusion within Scotland:

• The Scottish Government should move swiftly to deliver a new Digital Inclusion Action Plan. Building on this research, this actionable Plan should focus on longer-term support, prevention and tackling structural barriers to digital inclusion in line with the work of the Digital Inclusion Alliance and building on the Connecting Scotland programme.
• The Scottish Government should use its convening power to establish a Financial and Digital Inclusion Taskforce drawing on the public sector, the financial services industry and key third sector stakeholders. To address the different generational needs highlighted throughout this research, the Taskforce should focus on joint action for addressing barriers, better coordinating existing initiatives and providing clarity on delivery responsibilities and outcomes.
• The Scottish Government should commit to using Dormant Assets to provide funding to organisations and initiatives seeking to tackle financial and digital exclusion, adopting a similar policy to that already in action across England and Wales.