A lot of Gen Zers might just be bank-shy, according to a new survey by Socure, a digital identity verification provider, which found nearly half of Gen Z respondents wished they applied for financial accounts earlier in life but also did not feel prepared to enter the financial ecosystem by the time they were 18. 

This presents somewhat of a Catch-22, according to the survey, which polled 2,000 Gen Z members and found 35% lacked a digital financial footprint. These “digital ghosts” struggle to build the credit history they need to be approved for financial services because they don’t have enough of a financial footprint to begin with. 

They had little to no history of credit cards, loans, rental leases, or home purchases, which makes it harder to access those very same things.

Without a digital financial footprint, the report found, the identities of digital ghosts are extremely difficult to verify via traditional credit bureaus when attempting to access financial and government services. 

To be sure, many members of Gen Z, whose ages range from 11 to 26, are too young to even begin building much credit history. But key policies and tendencies are tilted against them.

The report identifies one of the biggest influences on Gen Z’s lack of financial credit footprint as the Credit Card Accountability Responsibility and Disclosure Act, a federal policy rolled out in 2009, which was enacted to protect consumers by requiring more transparency in credit card terms and conditions. While the regulation has helped Americans make better financial choices, it also introduced requirements for those under age 21 trying to get a credit card, including a cosigner and proof-of-income requirements. According to the report, that pushed back “their first traces of a financial footprint further in life than previous generations.”

In addition, identity verification, which is the paramount first step to accessing most financial services, is an increasingly difficult task for financial institutions as the prevalence of identity fraud steadily rises. Indeed, account takeover fraud resulted in $13 billion in losses in 2023, up from $11 billion in losses in 2022. Because of how common identity fraud is, businesses can no longer rely on traditional methods to verify identities, like a Social Security number or official documents, and often need to engage in more rigorous verification methods.

More than half of Gen Z survey respondents said they’ve had to go to financial institutions multiple times in person to verify their identities for financial accounts rather than simply signing up online. And because of difficulties verifying their identity, one in five report having issues accessing federal student aid or college loans and grants. 

Not surprisingly, Gen Z has grown weary of the myriad of ever-changing complexities rooted in financial services and are delaying the time until they begin banking. According to the survey, 40% of Gen Zers reported pushing off banking for as long as possible, while around 20% of Gen Zers believe banks do not want them as customers. 

The digital ghosts of Gen Z, however, represent a major market and economic driver: Gen Z currently earns $7 trillion across its global 2.5-billion-person cohort, according to Bank of America research, and is expected to generate an income of $33 trillion by 2030 as the youngest members of the group become adults. By then, Gen Z will represent roughly 27% of the world’s income. 

For the next generation of young adults, a lack of credit history and delayed starts to banking can come with expensive repercussions in important areas of investment, including housing, buying a car, and taking out a loan. Credit checks are often standard when it comes to qualifying for an auto loan or renting a home, and many landlords will either deny or hike up prices for applications with no credit history. Other financial services, like cell phone and wireless internet services, also often require credit score checks before applicants can qualify for a financing plan.