Banks under pressure to roll out anti-scam initiatives

One firm taking the lead with confirmation of payee service

Banks under pressure to roll out anti-scam initiatives

Amid increasing pressure to combat scams and fraud against bank customers, the New Zealand Banking Association (NZBA) has announced that it will provide an update in mid-December on the industry’s commitment to implementing its measures.

The measures, disclosed in September, include the removal of all weblinks from texts to customers, collaborative efforts to combat “mule” accounts, an inquiry into real-time information sharing among organisations affected by scams, and the establishment of a national anti-scam centre – and last but not least, the implementation of an industry-wide “confirmation of payee” account name checking service.

Akahu taking the lead

Fintech Akahu Technologies has taken the lead by becoming the first payment provider in New Zealand to implement a confirmation of payee functionality, called “Dolla,” which was inspired by similar services in the UK and Nordic countries, reported.

Josh Daniell, Akahu’s co-founder, announced that one New Zealand bank has initiated a trial with the service, while offering to collaborate with other banks eager to expedite the process.

“As a first phase, the ‘match’, ‘close match’, or ‘no match’ results can be used internally by fraud teams to help prevent customer harm,” Daniell said. “Once the implementation is working well internally, the bank can start to display results to customers.”

Red Bird Ventures, the venture capital fund of Westpac NZ, holds a 37.1% ownership stake in Akahu.

“Outside of the banks, Akahu will continue rolling out our confirmation of payee service to apps that provide payment functionality via Akahu,” Daniell said.

Banking industry under pressure

Big banks ANZ NZ, ASB, BNZ, Westpac, and Kiwibank, have all redirected inquiries regarding confirmation of payee to NZBA.

Banks have been under fire for not fixing systemic weaknesses, like the absence of name and account number checks for payments. The UK adopted confirmation of payee in 2020.

Critics argued that NZ banks’ failure to address these vulnerabilities makes the country an easy target for scammers who employ sophisticated tactics such as fake websites and elaborate investment pitches, deceiving people into parting with substantial sums, sometimes reaching hundreds of thousands of dollars.

In August, a parliamentary committee urged NZ banks to implement confirmation of payee, intensifying pressure on the industry.

Meanwhile, banks and telecom firms are taking action to thwart overseas scammers impersonating bank call centres, according to Stuff reports.

Earlier this month, the Ministry of Business, Innovation & Employment (MBIE) reported that scams led to losses of nearly $200 million in the year to September, an annual increase of just over 8%. And in September, the banking ombudsman revealed that almost one-third of its annual investigations were related to scams, with victims facing average losses of $57,000, reported.

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