Digital exclusion is costing the Scottish economy more than a billion pounds every year, with the nation’s offline population more likely to fall victim to cyber-scams, and even pay more for their household bills, according to new research from Virgin Money.
The bank’s latest report, Tackling the Barriers to Financial and Digital Inclusion in Scotland, examined the links between digital and financial wellbeing for the estimated 270,000 digitally excluded adults in Scotland, and found that ‘unbanked households’ pay £62 million more in bills a year.
While only around 5% of Scottish adults said they didn’t have access to a current account, more than a quarter (26%) had no access to savings, and almost a third (32%) had no credit card, with financial exclusion higher still for more advanced financial products.
As more than nine in 10 people access and navigate these financial services online, those without a computer, tablet or smartphone find it a major challenge, with the result that 25% of Scottish adults said they have very low confidence in managing their money.
The study, published alongside WPI Economics, also discovered that digital and financial exclusion causes 36,000 additional scams each year, resulting in Scots losing an extra £32 million every year to fraudsters.
Virgin Money’s report found that digital exclusion impacts wellbeing in Scotland to the tune of £1.2 billion annually, with adults who are digitally excluded suffering from a lower ‘wellbeing score’, impacting things like their mental health, social connections, and healthcare, along with their finances.
While it’s tempting to fall for a stereotypical view of the digitally excluded being the elderly or most vulnerable, the study found that ‘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%).
Rather alarmingly, this has led half of Gen Z respondents (50%) to say they have very low confidence in money management or in using financial products, and are also the generation least likely to be confident in avoiding scams at 66% compared to 79% of millennials.
To begin closing the digital divide, the report makes three key recommendations for Scotland, centring on actions the Scottish Government can take to bolster levels of financial and digital inclusion.
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Those include the swift delivery of a new Digital Inclusion Action Plan focusing on longer-term support and prevention to tackle structural barriers to digital inclusion; the creation of a Financial and Digital Inclusion Taskforce to bring together public sector, financial services industry and key third sector stakeholders; and a commitment to using Dormant Assets to fund digital inclusion initiatives.
“We agree that taking a lifelong approach to digital and financial inclusion will improve outcomes for individuals and the economy, particularly if supported by the right governance structures,” wrote Raymond Pettitt, director of customer service at Virgin Money.
“There is a fantastic opportunity for the Scottish Government to challenge the UK Government to deliver something truly game-changing both for individuals and for the economy as a whole.
“By co-owning the Financial Inclusion Strategy for Scotland and establishing a Scottish Digital Inclusion Action Plan, it can build on much of the work that they have already established and make Scotland a leading example of good practice for others to follow.”
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