Bank beefs up phishing and online fraud protection systems

The Australia and New Zealand (ANZ) Banking Group has reinforced its commitment to fighting online fraud by beefing up its scrutiny of large and high-risk technology projects.

In a statement released with its financial results for the half-year ended 31 March, the banking group said the "growing trend in electronic fraud" had forced it to focus very heavily on fraud prevention and detection.

"We are making increased use of technical tools to detect anomalies in customer transactions to reduce potential fraudulent activity," ANZ said.

The financial institution added that education will continue to be an essential component in fraud prevention for both staff and customers.

In response to incidents such as hoax emails, fake websites and computer viruses, a wide range of information has been made available to customers via a new "Protect your banking" website.

ANZ's statement comes amid reports that the bank - one of Australia's Big Four - has met with heavyweight rivals and smaller institutions recently to discuss ways of fighting online fraud. The ANZ, Commonwealth, Westpac and National Australia Bank have been particularly targeted by so-called phishing scams, which attempt to secure users' online banking details through a combination of fraudulent emails and websites.

In addition, ANZ said in its earnings statement that it had set up a specialist technology-risk function within its group risk management arm to enhance its approach to technology risk management and to provide an additional focus on large and high-risk technology projects.

"Governance and reporting has also been strengthened, with added executive management oversight and monitoring through the project-initiative review committee," the banking group said.

The move is part of a package of measures to improve the ANZ's framework for operational risk management and capital allocation, which was first implemented in 2000. It comes as the financial institution moves to integrate the National Bank of New Zealand (NBNZ), acquired in December in a transaction identified by the ANZ as a key risk issue for the group.

One high-profile ANZ tech initiative, the Next Generation Switching/Tandem replacement project, has already fallen foul of the merger. The banking group said it had written off $14.7m in capitalised software in the six-month period on the project "as it became apparent that expected benefits would not materialise." That amount was on top of $7.4m provided in the previous half year.

The ambitious Next Generation Switching project was reportedly one of the first to use Microsoft Windows on a large scale for ATM and point-of-sale transactions.

However, according to a report in the Australian Financial Review, the bank's new CIO, Mike Grimes, ditched the project earlier this month, citing integration issues associated with the NBNZ acquisition. ANZ will reportedly now stay with Hewlett-Packard's Tandem mainframe product.

Iain Ferguson and Kristyn Maslog-Levis write for ZDNet Australia