Fraud attacks deal blow to UK ‘s bank revolution scheme that encourages customers to share details
A banking ‘revolution’ that encourages customers to share their details in the hope of getting better deals has been hit by fraud attacks from the beginning, experts have warned.
Under Open Banking, current account holders can allow personal data to be shared with third parties in the hope of securing cheaper deals on everything from broadband to gas bills.
Customers have to give their permission every time a company wants to access their data. But it has previously been described as a ‘fraudsters charter’ due to concerns over security.
Fraud attacks: Under Open Banking has been described as a ‘fraudsters charter’ due to concerns over security
Speaking at a conference in London yesterday, experts said the programme had been battling fraud ‘almost since day one’ and warned the problem could get worse.
Paul Davis, retail fraud and financial crime director at Lloyds, said the proportion of fraud attempts involving Open Banking was already higher than on plastic cards or normal online banking accounts.
Mr Davis said: ‘If you give fraudsters a new opportunity it won’t take very long for them to monetise that.
‘Open Banking will be no different. Almost from day one we started to see attempts from fraudsters and unfortunately a small number of them have been successful.’
Micah Willbrand, the UK director of identity and fraud at Experian, said he also expected fraudsters to manipulate this through ‘money mule accounts’.
This is when gangs persuade teenagers to let them use their accounts to move funds in return for a cut.
Some 10,686 under-21s were caught acting as mules last year, according to fraud prevention service Cifas.
Yesterday, senior industry figures said big banks had spent millions on making the new system secure even though ‘nobody’ is using it.
Hetal Popat, the head of Open Banking at HSBC, said: ‘It’s cost a fortune and soaked up a huge amount of capacity that could have been put towards more interesting things.’
Steven Pairman, head of digitisation at Standard Chartered, said: ‘We have had to spend a lot of money on building a compliant ecosystem that nobody is using.’
Launched at the start of 2018, Open Banking was supposed to herald a new era of competition among banks by allowing customers to compare products from different providers.
But Olly Betts, chief executive of OpenWrks, responsible for the technology behind Open Banking, estimated only around 10 per cent of online banking customers used the service.
He said that banks were currently making around a £2 loss on every customer. ‘At the moment, it’s not sustainable,’ he added.
A spokesman for Lloyds said: ‘Open Banking is very safe and uses rigorously tested software and security systems.’