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.
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, just like the oldest in our society. We encourage the Scottish Government to act swiftly in partnership with the UK Government, banking industry and the third sector to create a unified approach to tackling this, to avoid leaving both generations behind.”
Focus group discussions revealed that those living in Scotland were consistently more fearful about the risk of being scammed:
Dave, 39, told us: “Unless it’s absolutely vital that I need to do something [online] I would probably not do it or at least have a lot of hesitation. I’ve heard a lot of crazy scams and I always [think] it is a matter of time before it happens. I try and avoid doing it unless I’m 100% sure and to be 100% sure is pretty tricky.”
Hazel, 43, shared: “I nearly had a vast amount of money scammed, but thankfully [the retailer] flagged up and saved me that. Ever since that happened, I’ve been a little bit more vigilant.”
Edward, 28, told us: “I certainly noticed with my parents or colleagues [who] are a bit older, just not being as aware of what like phishing scams and stuff like that look like.”
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 Scottish adults surveyed said that they do not have access to a current account, just over a quarter (26%) do not have access to savings and almost a third (32%) do not have access to a credit card.
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 specifically:
- 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.
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 £1.3 million to 15 community anchor organisations in Glasgow through its Building Digital Skills fund and awarded 93 grants to schools totalling £203,000 in Scotland through its Volunteer and Connect fund. Virgin Money also supports mental health through its charity partnership with Mind and SAMH.
