Andrew Morgan, CFO Bendigo Bank
Bendigo and Adelaide Bank on Monday became the first bank to partly disclose details about the level of financial losses it is incurring from the boom in online fraud and scams.
In a briefing for analysts held after the release of the company’s 2023 results, chief financial officer Andrew Morgan revealed that most of the rise in the group’s reported operating costs was attributable to customer-related fraud losses.
Bendigo’s total operating expenses grew by A$29.3 million in the 12 months to the end of June 2023, with fraud losses rising by $17.3 million.
Most of the cybercrime losses occurred in the second half of the year when non-lending losses excluding remediation ballooned by 79 per cent to $24.8 million from $13.4 million in the December 2022 half.
The bank, which has been expanding its digital banking services rapidly over the last four years, did not disclose the total amount it lost last year to online fraudsters and scammers.
However, the cost of financial crime to the bank was magnified by special investments it was forced to make in scam detection and prevention.
Morgan revealed that Bendigo doubled the size of its financial crimes team last year, but did not say how many full time staff now work in the unit.
Retirees make up a higher proportion of Bendigo’s customer base and this has probably accentuated the urgency of the bank deepening its anti-scam capability.
Anecdotal evidence appears to indicate that customers aged above 60 are more likely to be targeted by fraudsters because they tend to have larger account balances and are less confident dealing with digital threats.
Most Australian banks, including the four majors, have not published any information about the size of customer-related fraud and scams occurring each year in their businesses.
Such non-disclosure is presenting a challenge to depositors who are unable to make informed assessments about which banks are performing the best at thwarting digital scammers.
While leading banks such as CBA, Westpac and NAB are reticent to make specific disclosures about the size of their scam-related losses, they are nonetheless publishing eye-watering data regarding the amount of money they actively protected or recovered from scammers on behalf of customers.
At its full year profit announcement last week, CBA said it had it had prevented and recovered more than $200 million from scam-related activities in the last financial year.
Westpac claimed in April that it had saved more than $131 million on behalf of customers since January 2022 after it blocked more than 1.5 billion transactions from “potentially questionable merchants”.
NAB says it shielded and recovered $155 million from scammers in the same period.
However, victims of cybercrime are accusing the banks of not doing enough to protect customers at a time when they are shuttering branches and limiting access to cheques and other analogue-age modes of banking.
Bendigo’s disclosures about its online crime problems came as Australian Banking Association chief executive Anna Bligh yesterday tried to downplay concerns about protracted wait times experienced by online banking victims who tried to report crime incidents through the banks’ call centres.
CBA and Westpac customers are reporting they have had to wait up to three hours before calls were answered.
“I’m trying to be very upfront here, Virginia, and say it’s a very hard thing for banks to keep up with,” Bligh told ABC Melbourne radio’s Virginia Trioli.
“As they put more people into those centres we see even more demand.
“Banks are very keen for customers to ring them as soon as there is any evidence of a fraud or even a vague suspicion or fear.
“And – yes – it is their job to make sure there are sufficient people at the other end of the call.”
Bligh was then asked by Trioli whether three-hour wait times were acceptable for customers seeking to report incidents of fraud to emergency call centres.
“Well, I don’t think anyone would think that is acceptable,” she said.