‘Hidden’ costs of digital and financial exclusion in Scotland

Raymond Pettitt | Supplied

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; and digital and financial exclusion causes 36,000 additional scams each year, costing £32m

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 per cent) and older generations (14 per cent) are almost three times more likely to experience digital or financial exclusion than millennials (5 per cent). Half of Gen-Z respondents 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 per cent of Scottish adults surveyed said they were worried about the sophistication of scams
• 50 per cent of scam victims reported worsening mental health as a result of being targeted by scammers. Some 46 per cent stated that being targeted has made them less likely to access financial services online as a result
• 36 per cent of Gen-Z say they have been scammed compared to 19 per cent of older generations. Gen-Z is also the generation least likely to be confident in avoiding scams: 66 per cent compared to 79 per cent of millennials and 73 per cent 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.”

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 said it remains focused on addressing these issues. It said it is the only bank working with the National Databank to offer free SIM cards in its branches to those facing data poverty. It added that its funding through the Virgin Money Foundation has delivered £1.3m 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 explained it also supports mental health through its charity partnership with Mind and SAMH.