Scams and frauds are prevalent in the banking sector, with cybercriminals becoming ever more sophisticated in their tactics. According to Australian Competition & Consumer Commission’s report Australians lost AU$2.74 billion to scams in 2023 – although this was a welcome decline compared to 2022 (AU$3.15 billion lost) it is still alarmingly high.

In the recent Federal Budget 2024 the Australian government set aside $37.3 million over four years in anti-scam funding for the Australian Competition & Consumer Commission (ACCC), Australian Securities & Investments Commission (ASIC) and Australian Communications and Media Authority (ACMA) to administer and enforce mandatory industry codes for regulated businesses to address scams on their platforms and services, initially targeting telecommunications, banks and digital platforms services relating to social media, paid search engine advertising and direct messaging.

Banks in Australia play a critical role in safeguarding customers’ money and personal information and are becoming much more proactive in their approach. Banks are increasingly using data and intel to enhance detection, and are working with government, law enforcement, telcos and digital platforms to share data and disrupt scams.

The evolving threat landscape

One of the issues is that scams continue to get more sophisticated, using technologies such as AI, phishing and vishing to hook victims. They are also global, operating across jurisdictions which makes it even harder to recover funds. According to the Targeting scams: report of the ACCC on scams activity 2023, the biggest scam category in Australia by far is investment scams where money is frequently remitted overseas. The report says that Australians over the age of 65 lost more money than other age groups, with AU$121 million reported lost. Senior Australians looking for investment opportunities for their retirement funds, are disproportionately affected by these. While investment scams fell in 2023 there were sharp rises in false billing, jobs scams and rebate scams.

According to Publicis Sapient research, more than half (55 percent) of Australians feel they have been targeted by a scam or fraud attack. This is comparable to the Australian Bureau of Statistics figure of 65 percent of Australians targeted by scams in 2021-22.

According to the Publicis Sapient research, email scams (25 percent) were the most common experience, followed by fraud or financial attacks (24 percent), password theft (14 percent) and identity theft (11 percent). Those who identify as being in a “precarious” or “basic” financial situation were most likely to have been exposed to scams (74 percent and 57 percent respectively).

Understanding customer expectations

Australians are acutely aware of the risks posed by scams and fraud, but despite this are still falling victim to them. While older demographics are worst affected, even young, tech-savvy people who work in the banking sector get scammed. Australians also hold strong opinions regarding the measures that banks should adopt to protect their customers. Nearly all Australians (98 percent) expect banks to offer some sort of support if they fall victim to a scam or fraud.

Currently these expectations aren’t being met, with only one in three customers (35 percent) finding their bank “completely helpful”. Six percent found it hard to get any help, and a further six percent said they received no help at all.

This perceived lack of support can be highly damaging to customer trust and loyalty and result in attrition. As one Publicis Sapient survey respondent said:

“We were hacked after placing an ad and we asked the bank not to allow any other money out which they failed to do so we were very upset and basically withdrew all our money and we moved the bulk of it to a different bank.”

One government measure, the Scams Code Framework, seeks to improve this. It aims to impose strong, mandatory and enforceable obligations on banks, telcos and digital platforms. This will involve a multi-regulator approach including the ACCC, ACMA, ASIC and Australian Taxation Office. The government is investing AU$1.6 million over two years for the Treasury to legislate this.

Best practice approaches

Taking the right approach to scam prevention, education and supporting scam victims can be a competitive advantage for banks. One positive result from our survey was that most Australians (83 percent) are confident in their bank’s security and fraud prevention measures. This level of trust is critical for banks as it impacts their relationship with customers.

But the expectation gap still needs to be closed. Banks have an important duty to equip customers with knowledge to safeguard their money and data. They also need to educate customers on the areas where banks bear responsibility and where they can effectively intervene.

To help combat scams and support customers, banks need to use data effectively to identify risk factors, build a personalised plan for each customer and deploy a range of intervention techniques depending on the situation. These could include providing educational materials, pausing suspicious activity sooner or assisting with next steps in the case of a scam.

As Australian Banking Association CEO Anna Bligh has said:

“..there is still more work to be done and banks will continue to work with government and other industries in the scams chain to drive scammers out of Australia”.

By balancing customer expectations with realistic fraud prevention capabilities, Australia’s banks will realise benefits in terms of increased trust and retention, as well as meet future regulatory compliance obligations as and when they are legislated.

By Tales Sian Lopes, Managing Partner and Head of Financial Services ANZ, Publicis Sapient

This article was first published by KBI Media