Socure Report Describes “Digital Ghosts” – No Credit History or Financial Footprint

Socure, a provider of artificial intelligence for digital identity verification, sanction screening and fraud prevention, today unveiled research study findings revealing that 35% of Gen Zers in the U.S. and nearly one-third of legal immigrants are “Digital Ghosts.”

A Digital Ghost has little to no credit history or digital financial footprint. Without a history of credit cards, loans, rental leases, home purchases or mobile device ownership, their identities are extremely difficult to verify via traditional credit bureau-based methods when attempting to access financial and government services. Socure said this is a Catch-22, as Digital Ghosts cannot build the credit history required by traditional means of identity verification, simply because they don’t have enough of a financial footprint to begin with.

Gen Z: Digital Natives, Digital Ghosts

Despite growing up online and being recognized as digital natives, 35% of American Gen Zers, 22.9 million people, are Digital Ghosts. This portion of Gen Z lacks a digital financial footprint or credit history, which holds them back from accessing life-improving services from financial institutions and the government such as student loans, bank accounts, financial aid and credit cards. With Gen Z amassing nearly $6 trillion in wealth according to a 2022 study from the Federal Reserve, these Digital Ghosts represent a major market opportunity and economic driver.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 introduced requirements for those under 21 signing up for a credit card to have a cosigner, income proof requirements, and more. Intended to provide protections for American consumers with less financial experience, it has also contributed to deterring Gen Z from entering the financial system for longer. But, according to this data, there are also pressing challenges related to financial literacy and trust.

Nearly half, 49%, have significant regrets and wish they’d applied for financial accounts earlier in life. Half of Gen Z did not feel prepared to enter the U.S. financial ecosystem after turning 18, while 20% believe that banks do not want them as customers. Two in five (40%) Gen Zers have pushed off banking for as long as possible.

More than half, 54%, of Gen Zers report difficulties with identity verification, with 35% saying the biggest limiting factor is “having no digital financial footprint”. In parallel, many in Gen Z face considerable friction when attempting to access financial and government services that many Americans take for granted.

Over half of Gen Z, 51%, say that they’ve had to go in person multiple times to verify their identity for financial accounts rather than simply signing up online. Nearly as many, 46%, have been forced to email or mail copies of documents to prove their identity. One in five have had issues accessing student or college-related government services such as federal student aid or college loans or grants due to difficulties verifying their identity.

Many Gen Zers have grown apathetic around the value of their online identity. One in five Gen Zers in the U.S. are not concerned about identity theft, while 37% believe that no one would be able to do much with their identity if it were stolen. The FTC reports that identity theft cost Americans $8.8 billion in 2022.

Legal Immigrants Face a Digital Wall

According to Socure’s research, the legal immigrant population in the United States faces significant hurdles to accessing the opportunities offered by the American banking system and government benefits.

Nearly one-third, 31%, are Digital Ghosts, with little to no digital financial footprint or credit history blocking access to financial and government services, and 74% of legal immigrants don’t have any loans. Over half, 56%, don’t have a credit card, and 44% don’t have any bank accounts.

More than half, 51%, of legal immigrants say that they’ve had difficulties verifying their identity,  which has led to several limitations across multiple aspects of their lives. Almost half, 48%, say that they were denied access to government services as a result of identity verification issues.

Nearly as many, 45%, say they were denied access to both the job market and student loans.

Perhaps most distressing, many see this as a lifelong problem—with 21% saying that they’ll never have enough of a footprint to have equal access to these services compared to those born in the United States.

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