Banks to uplift technology under new anti-scam accord

Australian banks will begin work on a new payment confirmation system, implement technology and tighten associated controls in efforts to combat rising scams and fraud.

The move comes as banks unite under a new "Scam-Safe Accord" designed to deliver higher protection levels for customers against scams.

The new "confirmation of payee" system and extra security controls form part of six targets set out under the new accord.

In a joint statement [pdf], the Australian Banking Association (ABA) and Community Owned Banking Association (COBA) said the accord is a "comprehensive" list of anti-scam measures across the entire industry.

“At the heart of the Scam-Safe Accord is a $100 million investment by the industry in a new confirmation of payee system to be rolled out across all Australian banks," they said.

“Confirmation of payee will help reduce scams by ensuring people can confirm they are transferring money to the person they intend to.”

The statement said with 5.4 billion transactions totalling $2.5 trillion occurring every year across the banking sector, “the design and build of an industry wide confirmation of payee system is a major undertaking.”

The confirmation of payee system enables a payer to verify the payee account is authentic and true account owner prior to payment authorisation.  

It operates similar to the current PayID service for the New Payments Platform (NPP), where the payer can check the account name of the PayID before confirming a payment.

Australian Payments Plus (AP+) told iTnews an industry-wide confirmation of payee system “will help reduce certain types of scams that involve misdirection of payment to an account that does not belong to the intended payee as well as avoid mistaken payments to incorrect account numbers.”

“The proposed new confirmation of payee service will provide payers with the ability to view the payee’s name and/or see whether or not the account name is a match prior to making a payment for payments that are directed using a BSB and account number," an AP+ spokesperson said.

“This service will be delivered leveraging the NPP infrastructure as well as [by] developing additional centralised capability required to support the service.”

The AP+ spokesperson said the capability will be similar to “what a customer experiences when making a payment using a PayID but does not require the customer to register beforehand”.

“AP+ expects that a phased delivery approach could see existing confirmation of payee capability that exists today extended further during 2024, with a broad solution expected to be in place from early 2025.

"Confirmation of Payee will sit alongside AP+’s PayID offering as another tool to fight scammers,” the spokesperson said.

The new system’s design is expected to kick off “straight away” and will be developed and delivered across 2024 and 2025.

Inside the Accord

Under the accord, banks have promised to bring in new and higher protections into systems, which may see customers experience delays and warnings when transferring funds to a new account or boosting payment limits.

The accord will also see all banks “uplift technology and controls, including all major banks introducing unique identification measures known as biometric checks when opening new accounts” to combat identity fraud.

“In addition, the Scam-Safe Accord includes a major expansion of intelligence sharing across the sector with all banks acting on scams intelligence from the Australian Financial Crimes Exchange by mid-2024, and joining the Fraud Reporting Exchange.

“This means critical information is shared across the banking sector at speed about scam transactions, improving the chances of preventing scams and recovering stolen funds,” the statement said.

The six key measures outlined in the Scam-Safe Accord include:

• An industry-wide confirmation of payee solution
• Biometric checks to prevent misuse of bank accounts
• Warnings and payment delays to alert customers to potential scam payments
• A major expansion of intelligence sharing across the sector
• Limiting payments to high-risk channels
• Implementing an Anti-Scams Strategy

The accord brings together all of Australia’s customer owned banks, mutual banks, building societies, credit unions and commercial banks under the common goal.

ABA CEO Anna Bligh said the Scam-Safe Accord “is a new offensive in the war on scams.”

“It reflects the banking sector’s unwavering commitment to safeguarding every Australian.

“It outlines the actions every bank will take to protect Australian consumers and small businesses and to harden the system against scams,” Bligh said.

COBA CEO Mike Lawrence said the new initiative is “a significant step forward and demonstrate the banking industry’s commitment to fight scams”.

“It doesn’t matter if someone banks with a regional mutual bank or the largest bank in the country, customers can be confident their bank is working hard to protect their money,” said Lawrence. 

Industry response

Following the accord announcement, Westpac said the industry pledge to invest in a new confirmation-of-payee system is the “centrepiece” of the agreement.  

Westpac general manager, financial crime and fraud prevention Chris Whittingham said “the accord is a significant step forward in making Australia a hard target for scammers.”

“Cracking the problem through industry collaboration ensures we’re combatting sophisticated scammers more effectively,” Whittingham said.

Westpac has also introduced new payment prompts and Westpac Verify in recent months.

NAB executive group investigations and fraud Chris Sheehan said: “We’re in the middle of a global scam epidemic and while there is no silver bullet, we need to make it as hard as possible for these criminals to be successful.”

“As an ABA member, we’ve played an active role in the development of the Scam-Safe Accord and believe it will provide a framework for the banking industry to help protect Australian consumers and small businesses from this global crime wave.

“The significant industry investment into a new confirmation of payee system will play an important role addressing business email compromise scams.”

NAB has also introduced its own initiatives including removing links in most text messages and making 62 changes under its capability uplift in its financial crime function.

An ANZ spokesperson told iTnews the bank “is proud to partner on this industry initiative that reflects the banking sector’s unwavering commitment to safeguarding Australian consumers and small businesses from scams.”

“Scams are an insidious problem which can impact the entire community and we continue to work closely with other industries, and the government as we tackle this society-wide issue,” the spokesperson said.

The Commonwealth Bank of Australia’s general manager of group fraud James Roberts said, “Our firm belief is that a whole-of-ecosystem approach is required to address scams.”

Over the year, CBA introduced NameCheck technology and has since made it available to other industries and also officially switched on its ‘scam indicator’, developed in partnership with Quantium Telstra.

Bendigo Bank said collaboration is key to fighting scams and fraud, with CEO and managing director Marnie Baker stating cyber fraud is a complex, evolving, and ongoing challenge”.

Baker, who is also ABA deputy chair, said the “bank has been proud to support the development of the accord and its seven priority areas and looks forward to working with the ABA and other financial institutions to help further protect our 2.4 million customers.”