Banking on Trust: Our 5-Minute Design Tweak to Save $200M

Following Parliament’s Finance and Expenditure Committee inquiry into banks’ processes and consumer protections against scams, Commerce Minister Andrew Bayly has ordered banks to develop a voluntary reimbursement scheme for scammed customers.

Roger Beaumont, the chief executive of the New Zealand Banking Association, expressed concerns that such a scheme might reduce customers' incentive to safeguard their finances, potentially leading to higher fraud losses. Really?

The banks have until September 2024 to respond.

$200 million reasons for change.

New Zealanders lose $200 million per year to financial fraud. That's $547,945 a week, $22,831 an hour. By the time Minister Bayly’s September deadline rolls around, that figure will be about $110 million.

This is a drop in the ocean for the banking industry, which has collective profits of $7.21 billion for the year end December 2023.

Without government intervention, how incentivised are the banks, Mr Beaumont?

Building Brand Trust.

Here is a comment from KPMG's head of banking, John Kensington. “The banking sector sees the next couple of years as an opportunity to play its role in supporting customers as they act on their social licence and build trust with the public."

Shouldn’t banks always be looking to build brand trust?  This is especially important for a sector where most of the profits leave Aotearoa to fill the coffers of Aussie banks.

We’re a branding agency, so we know a bit about building trust between brands and people, especially banking brands and their communities. We created the Kiwibank brand, so we have some insights and experience about this.

How a 5-minute design tweak could save millions.

New Zealand banks currently lack payee authentication technology, but that shouldn’t stop them from focusing on reducing financial fraud, by improving their communication at critical touch points on their banking apps.

This is a simple and straightforward way for banks to help reduce financial fraud immediately and build brand trust.

Below are screenshots from some New Zealand bank’s payee windows – this is where customers make a payment and set up a new payee. During this process people believe the bank accounts are legitimate but can in fact belong to scammers.

Do you find it difficult to see the message from the bank that reminds you to check that the payee's name and account number match?

By using simple design practices it’s possible to create alerts reminding customers to check payee names and account numbers.  

Using Westpac’s payee screen (below, left), we quickly demonstrated how to make the messaging more obvious by reversing the alert message out of red. The colour red is urgent, important, it gets our attention. What colour is a Stop sign? Exactly.

This took us about five minutes.

Payee Verification Progress.

We can’t say the banking industry is sitting idle. Following a $1.4 million investment from Westpac's venture arm, Red Bird, Akahu announced a payee verification trial in November 2023 – however, there is no timeline for implementation.

But at the same time, there can be a lack of urgency. In 2018 Tasmyn Parker published an article in which Payments New Zealand Chief Executive Steve Wiggins confirmed that ANZ, Westpac, and BNZ would be trialling matching technology for bank account names and numbers. We’re wondering how the trial is going.

The Urgency of Building Trust

New Zealand banks may currently lack the technology for payee authentication, but they have a responsibility not only to protect their customers' assets but also to earn and maintain their trust.

Banks can do this by taking some simple steps – such as clearer messaging when making a payment to a new payee. This isn’t complex stuff, it’s not hard to implement and let’s be honest, what took us five minutes to ‘design’ is $200 million times better than what the banks currently have in place.

Here's a tip for the banks; don't wait for regulatory mandates, history tells us that September 2024 might actually be September 2028, and New Zealanders can’t afford to wait any longer.