Australia is being hit particularly hard by bank frauds and wider financial scams, international analysis by KPMG has shown.
The inaugural KPMG Global Banking Fraud Survey has found 61 percent of banks have reported an increase in external fraud in value and volume over the past three years. The Survey questioned banking fraud risk, investigations and security professionals in 43 banks, including eight in Australia, on the fraud threats they faced between 2016–2018.
Banks across the world said that cyber-related fraud, often leveraging information obtained from data breaches, were their most significant fraud challenge; particularly due to the increasing proportion of bank customer interactions being conducted through digital channels.
Natalie Faulkner, KPMG global fraud lead, and KPMG Australia Partner, said: “All regions of the world reported an increase in cyber-attacks, scams, identity theft and ‘Cardholder Not Present’ (CNP) frauds. This is set in the context of a changing global banking landscape, where branch networks are shrinking, volumes of digital payments are increasing and there is less customer ‘face time’. Fraudsters are creatively finding new ways to steal from banks and their customers, increasingly switching from account takeover to scams - manipulating and coercing customers into providing access to their bank account or into making payments to the fraudsters.”
“We are seeing a disproportionately high volume of scam attempts on Australians – there were 177,000 scam reports here last year, costing almost half a billion dollars. This compared to around 85,000 scam reports in the US and UK, with far bigger populations. This covers a wide variety of scams – defined in our report as ‘social engineering’ frauds - including investment, romance, crypto-currency, false billing and tax office/government agency scams.”
“Further, it should be remembered that much fraud goes unreported.”
Australian banks are closely watching the UK, which launched a Contingent Reimbursement Model Code for Authorised Push Payments Scams on 28 May 2019 (the Code). Banks who have opted in to this code may reimburse scam victims in certain circumstances where the bank and the customer have met the conditions set out in the Code. As at 24 June 2019, eight UK banks have opted into the Code.
Natalie Faulkner said: “In terms of banking fraud, there are differences in how banks globally manage the risk of scams experienced by their customers, with some Australian banks setting up anti-scam departments in parallel with anti-fraud. More sophisticated fintech providers are emerging with capabilities to help Australian banks better identify, mitigate and manage risk.”
KPMG’s Global Banking Survey was conducted between November 2018 and February 2019 across 43 retail banks, 13 of which are in the Asia-Pacific, 5 in the Americas and 25 in Europe, the Middle East and Africa (EMA) region. 18 have annual revenues in excess of US$10 billion and 31 employ more than 10,000 people across the globe..
Respondents were asked about trends in fraud typologies, challenges they are facing in mitigating threats, security in a digital age and how they are structuring their teams and deploying resources to optimise their fraud risk management efforts.
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