Preventative measures by governments and banks prompted a 40 per cent drop in losses from scams in 2024.
Local banks and financial institutions are getting the upper hand on scammers, with a material drop in the value of customer funds lost to scammers last year. Meanwhile, Australian banks are working hard to prevent cyber criminals from fooling unsuspecting victims.
According to professional services firm BDO’s research, while local scam losses and cases rose from 2020 to 2023, there was a 40 per cent drop in losses in 2024 following a focus on preventative measures. By comparison, UK, US and Canadian scam losses have risen in this same period.
“Fraud and scams continue to be prevalent in Australia with more sophisticated approaches being seen. Protecting our customers is always a top priority and we continue to implement new systems and processes to identify and monitor threats. In recent years we have expanded our dedicated financial intelligence team to better protect and monitor our customers’ funds,” says Bank Australia chief technology officer, Scott Wall.
When Bank Australia identifies a scam, what’s important is to act quickly and communicate with customers through multiple channels such as the banking app, internet banking, emails, web alerts and social media. “Our ultimate goal is to keep our customers safe and well-informed,” says Wall.
Bank Australia has made significant investments in advanced technology and capabilities to ensure it has the resources to combat cyber criminals.
“We have an AI-powered digital customer onboarding experience to help customers identify themselves more easily and detect fraudulent activity before accounts are opened, preventing identity theft,” says Wall.
The process includes a full biometric check and is a faster, more secure experience for customers, with fewer identity documents required and less manual input.
“We are introducing an AI tool that allows us to identify when a customer’s internet banking account is being accessed by someone other than the customer, which will allow us to block malicious access,” says Wall.
“We also have an anti-money laundering platform that enhances our ability to prevent money laundering, criminal and terrorist financing and block mule accounts used to transfer the proceeds of fraud and scams,” he says.
Keeping pace with technological change
According to Phil Goulstone, financial services partner with digital transformation firm, Baringa, all banks and finance businesses are at risk of being targeted by scammers, who are only becoming more bolshie.
“There are lots of scammers out there and it’s a very lucrative business. Most of them are based abroad, often in developing countries or countries where they are safe from prosecution. They are smart and the scams are lucrative. Everyone is at risk and the problem is growing. I think most people know someone who has lost money, sometimes small sums but sometimes devastating amounts for the person involved,” he says.
Goulstone says inherently vulnerable systems is one of the challenges banks are dealing with when combatting scammers.
“People like being able to make payments easily and banks have worked hard to develop friendly apps which allow their customers to transfer money or purchase goods easily. Unfortunately, that makes it just as easy for them to make a payment to a scammer,” says Goulstone.
“It is almost impossible for a bank to tell if a payment is being made as part of a scam – and of course customers would be unhappy if genuine payments were stopped.”
Banks must strike a balance between taking responsibility for scam payments and effecting efficient customer authorisation for payments. “Real-time payment settlements make fraud detection challenging,” acknowledges Stan Gallo, partner, advisory forensics for BDO.
Gallo highlights the importance of standardised definitions for scams versus fraud across countries to enable accurate comparisons. “Information sharing between banks and regulators is crucial but needs to handle privacy concerns,” he says.
There is considerable collaboration between banks to stop scammers in their tracks and the Scam Safe Accord sets out a series of scam detection and prevention processes banks are due to implement this year. Treasury has also released a new Scam Prevention Framework to better protect consumers over time across all sectors including banking, telcos and other digital platforms.
“Telcos have an important role to play to prevent the rising level of SIM swapping, which is a real problem when so many of us do most of our banking by phone,” says Goulstone.
SIM swapping is where criminals trick a telco into transferring a phone number to their SIM card so the criminal can access the account and customer’s identity. Having a scam strategy, putting in place the ability to hold or delay potential scam payments and preventing scammers from impersonating phone numbers are opportunities for banks to reduce scams.
“Scammers are targeting Australians more frequently than ever, using increasingly sophisticated methods. We've made it a priority to keep our customers safe from scammers. In response to the rise in scam activity, we've focused on equipping our customers with better education and tools to protect themselves,” says Wall. Bank Australia is part of the Scam Safe Accord. Financial services gets ahead of scammers Financial services gets ahead of scammers
Looking ahead, experts predict an increase in scams using AI and technology. “Banks are investing more in real-time fraud detection and AI to counteract scams, but customers will need to take more responsibility while banks enhance protective technologies,” says Gallo.
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