Hong Kong banks are ‘better-than-expected’ at owning up to beat cyber fraud, survey findsMore than half of banks took full responsibility and refunded losses, which only 44 per cent of customers expe

Hong Kong banks are ‘better-than-expected’ at owning up to beat cyber fraud, survey findsMore than half of banks took full responsibility and refunded losses, which only 44 per cent of customers expected, FIS research says:

Banks in Hong Kong are doing a better job than expected at taking full responsibility and reimbursing lost funds after fraud events related to online banking or financial apps, according to a survey by financial technology company FIS.

Some 53 per cent of the respondents said their banks assumed full responsibility and reimbursed all the funds they lost in instances of fraud, such as unauthorised access to accounts or theft of personal and financial information. That was a pleasant surprise, as only 44 per cent expected banks to be fully responsible regardless of the reason for the fraud, FIS said.

More than a third said partial responsibility and refunds took place, while about a tenth did not receive any funds as their banks accepted zero responsibility for the fraud.

Banks have stepped up and addressed the underlying fraud and scam risks as they have grown to understand the issue and appreciate the integrity of the relationships they have with clients, said Kanv Pandit, head of corporates and international banking at FIS.

“The banking industry has a more mature and well-understood view of what is driving scam and fraud losses, and [the] individuals who have been impacted,” he added. “The collective industry understands now much better versus even 24 months back.”

The survey, published on Friday, was conducted in July and August with 1,076 adult Hong Kong consumers. The research explored their attitudes towards online banking customer experience, their perceptions and experiences regarding online banking fraud, and their approaches to investing.

The same survey was run concurrently in Singapore, where a higher percentage of consumers – 53 per cent – expected banks to assume full responsibility but only 51 per cent experienced that outcome and received total reimbursement.

Fraud and scams have been rampant in Hong Kong, as financial losses surged 66.5 per cent to HK$4.48 billion (US$575 million) in the first six months of this year compared with the same period a year ago, according to police data. Online fraud losses surged 29 per cent to HK$2.56 billion during the same period, involving 12,403 cases.

The FIS survey revealed that almost one in four Hongkongers has been the victim of fraud related to online banking, with millennials, or people aged between 28 and 42 years, experiencing the most incidences of fraud. The surveyed boomers, aged above 59, experienced the fewest fraud events, likely due to lower adoption of online banking services.

While most of the surveyed fraud victims got help from their banks to resolve their issues, some had to fight. Forty per cent of the respondents said their banks kept them updated about the status of their claims, while 30 per cent said their banks required them to prove the fraud took place.

Banks in Hong Kong have introduced additional security measures for fraud prevention but have to balance the potential inconveniences brought to their banking services.

Most respondents in the FIS survey sought a balance of convenience and security across the full spectrum of online banking interactions, with only a minority seeking convenience over security (see chart below). Members of Gen Z, those aged between 18 and 27 years, were more focused on convenience in areas such as current account balances and statements, FIS said.

The survey also found that “money lock” to prevent withdrawals emerged as the most sought-after banking innovation, with 65 per cent of the respondents rating it as a highly important feature – more than other features such as card-less withdrawals and voice-activated virtual assistants.

In April, Citigroup became the first bank in Hong Kong to launch an emergency e-banking service lock that allows customers the option to temporarily disable access to transaction services via app when they suspect malicious access to their account.

“We work closely with local regulators, law enforcement units and the banking industry in the fight against financial crime,” a Citigroup spokesperson said. “Technology enhancements and additional security measures have also been applied in anti-deception initiatives to detect and prevent suspicious activities.”

“There is a much larger scam and fraud industry that has become more sophisticated, and it certainly needs banks and financial institutions to work closely with solution providers to bring innovation to this problem,” said Pandit of FIS.