ASB has stopped sending hyperlinks in text messages to its customers, and a progress report on an industry response to bank scams is expected in December.
The New Zealand Banking Association (NZBA) announced in September that NZ banks would remove all links sent to customers via text, that the industry would instigate real-time information sharing on scams and name and account number checking, and threw its support behind a national anti-scam centre, similar to those already in operation in Australia and Singapore.
Bank scams cost New Zealanders an estimated $200 million in the year to September 2023.
ASB chief executive officer Vittoria Shortt, who was also chairwoman of the NZBA, said work “was progressing fast”.
The bank confirmed it had removed hyperlinks – which the telco industry has said sets up customers to be scammed – in July.
Shortt said bank CEOs were meeting fortnightly, and the “broader” team had met for two full days. Bank fraud teams were also working together to share scam solutions, she said.
“Everyone is really putting in a lot of effort.”
Critics say NZ banks have been too slow to respond to the rising number of scams against their customers, and the country is lagging in adopting new technologies such as name and account number checking and real-time bank-to-bank payments.
Parliament’s finance and expenditure committee recommended adopting of name and account number checking in August and that a voluntary compensation scheme for victims be investigated.
Commerce Commission chairman John Small has pressured banks to update payment systems, which he said would also improve security against frauds, warning the commission may regulate the bank transfer network to speed up adoption of in-person bank-to-bank payments.
The 2022 Retail Payments Act allows the commission to regulate payments.
Critics say NZ is in the company of North Korea, Laos and Papua New Guinea in failing to roll out real-time account-to-account payments.
The commission gathered submissions from the industry on payments innovation, closing consultation in November.
Shortt said NZ banks could process payments with a 30-minute delay seven days a week, and banks had “continued to invest in payment systems as a core part of what we do”.
“We spend enormous amounts of money trying to make sure it’s protected and safe and secure.”
She said making payments faster and easier “without addressing the safety element is just not the right way around”.
“For me, it’s a question of sequencing. What I would like to see done first is getting onto frauds and scams. The second thing I really like to see for New Zealand is digital identity.
“I think digital identity is really important and one of those safety capabilities that I think is helpful for the country. I also think it’s a massive efficiency play,” Shortt said.
“Running around handing over our ID [to] many different places – it’s just not an efficient way to work. Digital identity could really solve that.”
Next would be open banking, she said.
Open banking allows people to securely hold and move financial information between banks and financial providers and share it with third-party providers.
Bank-owned Payments NZ set the standards for open banking in 2019. The Commerce Commission said banks had been slow to adopt them widely.
ASB was one of the big four banks that bought payment platform Worldline’s application programme interface (API), allowing external access to customer data to make payments for online Eftpos in 2022.
Worldline sold its first open banking API in 2016.
New commerce and consumer affairs minister Andrew Bayly said before the election that National was “very keen” on open banking and its potential to protect consumers.
He said open banking needed personal data stored in a virtual secure location, and technologies like blockchain could be used for that.
Good customer identification would be needed, as well as a consumer data protection right, he said.
In 2022, the former Labour government said it would bring in a consumer data right (CDR) framework to give consumers the right to have their data shared.
Shortt said the key to halting scams against New Zealanders was getting the anti-scam centre running.
A centre with all government agencies, including NZ Police, working alongside the banks would allow real-time information sharing and pick up and deal with scams collaboratively.
She said banks may only see part of a scam picture when working in isolation. Being together in a centre would deal with privacy concerns and allow anti-scam teams to tap into the powers police and crime agencies hold.
“We must have a national coordination centre. If I can share and send and share information in real-time, then we’ve got a much better chance of actually preventing the frauds and scams.
“That can be done within an anti-scam centre, that can be done when you’ve got police at the centre of it.”
Shortt also wanted tougher penalties for scammers.
“It is a huge crime, and it’s very disruptive. It’s funding things. It’s funding wars and all sorts of really awful activity. I think the effect of it should be recognised in the penalty.”
Currently, the maximum penalty for fraud is seven years, the same as the maximum for shoplifting.
There were no funding roadblocks to setting up the centre from the banks, but Shortt said she couldn’t speak for funding from government agencies such as NZ Police.