By Robert Laing for Business Day
The number of complaints from banking customers grew by an “unprecedented” 35% to 7 056 formal cases opened by the industry’s ombudsman in 2017, from the prior year.
Cases involving internet banking fraud overtook ATM complaints, banking ombudsman Reana Steyn said in the office’s annual report released on Wednesday.
Steyn said 22% of all banking disputes related to online banking, and “phishing” — a fraud scheme whereby consumers are duped into disclosing their login and password details via e-mails purporting to come from the bank — accounted for 77% of these.
“The category that previously topped the list, ATM complaints, were second highest at 18%, down 10% from the previous year, which is good news,” Steyn said.
The Ombudsman for Banking Services (OBS) is a voluntary dispute resolution service funded by the industry to offer consumers a way to escalate complaints without employing lawyers.
“It is unfortunate that consumers who are unsuccessful with their complaints levy the criticism of bias against the ombuds office. Our office works very hard to uphold high standards in adjudication and in applying the law to the fact of the case,” she said.
“The office found in favour of complainants in 27% of the cases, indicating that most matters capable of early resolution were resolved at the bank. While the number may appear low, it is in line with international experience at other ombuds offices.” People unhappy with their bank are encouraged to take their dispute to the OBS if their complaint has not been handled within 20 working days.
Bank Zero appears set to accelerate the evolution of the South African banking industry by offering a fresh take on banking and highly competitive fees.
The bank — the brainchild of tech entrepreneurs and banking innovators Michael Jordaan and Yatin Narsai — has received a provisional licence from the South African Reserve Bank. It is due to launch a smartphone app, through which transactional and savings accounts can be opened and managed, in the fourth quarter.
The digital-only play, built using free open-source technology, is expected to lower banking fees thanks — in part — due to a lack of legacy systems and absence of traditional bricks and mortar branches, which will enable it to keep costs down.
“We certainly hope to come up with a very competitive structure. We do realise that we have certain disadvantages — we won’t have branches and we won’t have lending products — so we’re going to have to make an impact in the areas where we’ll play, being deposits and fee structures.
“It’s a bit too early to disclose exactly what we’re going to do because that would give competitors an advantage but we really hope to delight you and other potential South African customers when we launch toward the end of this year,” said Jordaan, co-founder and chairman of Bank Zero, when asked whether his offering would be cheaper than that of Capitec. Of the listed banks, Capitec’s offering, which includes a base fee, pay-as-you-transact charges and interest on positive account balances, is considered the most competitive.
In an attempt to nurture a savings culture, the bank is to offer attractive interest rates on deposits and has chosen upfront not to engage in lending.
Its target market includes individuals and businesses, which it feels are under-served by the traditional banks.
In a statement, Jordaan said the bank’s offerings would be in line with modern day realities, where the likes of Facebook, WhatsApp, Twitter and Instagram represent a new normal. “Why shouldn’t banks also innovate in this era of wider connectedness whilst still ensuring a robust banking value proposition? Bank Zero is addressing these realities, while employing cutting-edge technologies, minimising typical admin-intensive processes and delivering state-of-the-art security.”
Bank Zero is to operate under a mutual licence, like that of Finbond, GBS and VBS. This will allow the bank to create financial communities and give customers the opportunity to become shareholders in the bank. Bank Zero will, after breaking even, be able to issue shares along with voting rights to deposit holders.
Jordaan would not disclose the value of the capital invested in Bank Zero nor its breakeven point, saying only that it is more than adequate in relation to the the Reserve Bank’s minimum requirements. The bank is being funded by seven individuals, all of whom are seasoned banking or IT and software development professionals, and is 45% black owned.
“We are fortunate in that we didn’t have go to any institution to raise the capital. And that does allow us to take a slightly different approach to the market. It means that we can focus on the long term so we’re not just focused on chasing short-term profitability; nor are we chasing maximum profitability in the short term. We really think that there is an opportunity here to cast many of the benefits of the business model and of the technology back into the target market in South Africa.”
Although no institutions are financial backers of the bank, it will have to select one of the big four banks as a mentor bank to help it fully integrate into the payment system. Jordaan said Bank Zero has not yet selected a mentor bank but that it will do so with guidance from the Reserve Bank.
It is likely to become the fourth new bank to enter the market in 2018 alongside Discovery’s bank, Tyme Digital by Commonwealth Bank and Post Bank.
By Prinesha Naidoo for Tech Central
A new banking scam whereby fraudsters remotely take control of your PC over the Internet to gain access to consumer’s online banking profile is currently doing the rounds.
This is according to First National Bank (FNB), which alerted consumers about the latest festive season scam.
In a statement, FNB says fraudsters are sending unsuspecting consumers fake emails notifying them that fraud has occurred on their respective bank accounts’ or credit cards.
Soon after the email is sent the customer receives a call from a fraudster claiming to be from their bank and offers to help block any fraudulent transactions by first requesting the customer to install “protection” software on their computer, which allows the fraudster to gain full control of the computer remotely.
Kovelin Naidoo, cyber security officer at FNB, says fraudsters are employing carefully constructed scamming tactics that have the ability to trick even the most vigilant customer if they are not aware of the modus operandi.
“If someone calls you and requests your personal banking details or to install remote access software on your computer, please end the phone call and contact your banks’ fraud contact centre. FNB will never ask you to share your OTP to reverse pending transactions or to block your banking profile,” cautions Naidoo.
He adds: “As access to banking services through digital channels continues to grow, so does the prevalence of banking scams, therefore we urge consumers to always be vigilant and familiarise themselves with the different types of digital banking fraud, as well as the security measures provided by their respective banks.”
How fraudsters use the software to defraud consumers:
- The fraudster calls the customer and offers to help them block any fraudulent transaction by asking him/her to download and install “protective” PC software.
- The customer downloads the software, and with the help of the fraudster, installs it.
- Once the software is installed, the fraudster asks the customer to log into his/her personal online banking profile.
- After logging in, the customer’s computer goes blank. Shortly afterwards, he/she starts receiving OTP (one-time pin) SMS’ to confirm transactions he/she did not perform.
- The fraudster then reassures the customer that these are fraudulent transactions and requests that he/she forwards the OTPs so that they can be blocked or reversed immediately.
- The fraudster then uses the OTPs forwarded to him/her to process the pending transactions and defrauds the customer.
Source: IT Web