Disclaimer: What you're about to read is of a general nature and doesn't take into account your personal financial situation, needs or objectives. We recommend you seek financial advice before making any decisions about your super and consider the relevant UniSuper PDS and TMD.
Marta: Hello. And welcome back to another episode of Super Informed Radio—the podcast where we help you wade through the complexities of super and the broader world of finance. As usual, I'm Marta.
Rob: I'm Rob.
Lyndon: And I'm Lyndon. Now, spending is changing like never before -- I think we would all agree. From payment cards to Bitcoin, even smiling as payment in certain parts of the world, Marta, I believe. That's a thing, is that right?
Marta: Oh, yes, I'm not lying here. In doing some research for this episode, I came across a piece by the BBC which was talking about how in some parts of China, you can actually smile as a form of payment, using facial recognition technology akin to kind of what goes on at airports. It's a bit “Black Mirror”, but in a good way.
Lyndon: I don't like it. Needless to say, tech disruptors are changing some of the core pillars of finance and the way we think about and use money. And while many people are keen to embrace these changes with open arms, there are a few things we should probably be looking out for.
Rob: Yeah, and once you do actually find an app or an online service that does work for you, there's been some new amazing advancement that takes us all by surprise and sweeps us all off our feet.
Marta: Yeah. So to provide a bit of a lowdown on these emerging technologies or the “Uber-isation” of finance, as it were, we've got Dan Nguyen, UniSuper's Head of Digital Strategy. And we've also got Marlene Sadhai, UniSuper's Manager for Financial Crime Response to bring us back down to earth and let us know what we should be aware of before venturing into this brave new world.
Lyndon: All right, let's get into it.
Marta: Let's do it. So Dan and Marlene, thanks very much for joining us today.
Dan: Thanks for having us.
Marta: No, worries. From what I've gathered, read and done a bit of digging around it seems like the “Uber-isation” or the digital revolution has turned its beady eyes to finance and flipped the way we go about spending and saving our money on its head.
Dan, what kind of changes have we seen and how far will it go?
Dan: Whoa, that's a very big question -- how far will it go? It really does feel like a lot has been happening in this space as of late. And when we talk about “Uber-isation”, I guess there are a lot of aspects to what that potentially could mean. So, for example, a lot of people think about Uber and the user-experience that Uber's been able to create.
The ability to actually set up an account at 3:00 in the morning, whilst you're intoxicated, and be able to get yourself home safely? I think that's an amazing type of journey that the actual customer's been able to do. On the flip side, they've also got a really great on-boarding process for their drivers as well so that's a very important aspect of what Uber's brought to the table. That in terms of a customer-experience perspective, you'll be able to see come through to financial services.
Marta: Like, it's a lot slicker and faster and there are no issues. The expectation is that, now, people want that same experience everywhere else…
Dan: …everywhere else. And that will definitely come through to financial services. Another aspect of “Uber-isation”, is just the platform that they've created so a peer-to-peer type of platform whereby you're connecting supply and demand together quite seamlessly so we've seen that in Airbnb as well and other platforms.
And it's going to be interesting to see how that's going to come through to the finance space? We've seen it in peer-to-peer lending, so I don't know if you've come across organizations like SocietyOne in Australia?
Marta: How do they work?
Dan: Instead of going to a bank to borrow money -- you can go to this platform called SocietyOne. And it allows you to request for a loan -- up to $50,000. And the people who loan you the money are other just investors. So they're not institutions or anything like that.
They just use the platform that SocietyOne have put together. They do credit checks. So they do go off and do credit checks -- it's all built into the platform but it allows investors and people who need money to come together and meet a need and a demand.
Marta: And if you want to avoid the banks, who are a bit scary—then, it's probably a way to do so?
Dan: Exactly, right. So in Australia, it hasn't really taken off that quickly but in the States it's absolutely massive. There's an organization called The Lending Club and they've been doing really, really, well.
Marta: Why do you think that is? Or, is there any sort of info out there that says why Australians…or why we tend to be a little bit reluctant to dip our toes in this? At least, in this lending lens?
Dan: In the lending lens? I'm not entirely sure. I think, in certain aspects, we are innovators but for the majority of things -- we are slow adopters. We like to see things come to fruition before we pick things up.
I don't know if part of our culture or whether the focus, in regards to delivering these services are targeted to bigger markets. And then, slowly, it comes across to us.
Marta: I guess moving to like talking about Aussies being or Australians, generally, being slower adopters or later to the party? Millennials and younger people tend to be groups of people who like to try things, first.
And I've come across some research and some writing out there that have talked about micro investing apps like Acorns and stuff, where young people say that as a bit of a dip in the investing space -- how does that work?
Dan: Yeah. So this is an area really close to my heart -- micro investing. I think it's something that I feel creates really positive habits, especially for young people who've got a really longtime horizon, in terms of their financial future and investing. The way that these micro savings companies work is, they're really slick, in terms of the user interface.
But what it does allow them? It allows customers to actually visualize where they're savings are taking them towards. So what I mean by that is, there's lots of charts and projections and things like that. But the power of what it does is, it creates a model whereby younger people can put aside a small amount of money regularly, without impacting their lifestyle too much, which will make a huge difference in 40 years’ time, for example.
Marta: It sounds kind of easy and too good to be true.
Dan: Yeah, well, that's the point of it. That's how they've been able to pick on a market who really weren't too okay with financial services…
Marta: Or jumping straight into like the ASX or the stock market—it's more broad…
Dan: So they make it really, really easy. You can setup an account really quickly and you can get going really quickly.
Rob: Yeah, I kind of like Acorns approach, actually. One of the things that does sort of, I guess irk me a little bit is that you have to hand over your bank log in don't you and your client ID and that sort of stuff to them? And does that not concern other people? What's your view on that?
Dan: It concerns me. It definitely concerns me. I guess they do, what they do so well that a lot of their customers don't realize what they're actually handing over.
So what Rob's referring to is the fact that these applications, what they do is, you log in. You hand over your user and password for your banking institutions. And then, they log in on your behalf and they look at your statements. And then, they can round up transactions.
So, for example, part of the Acorn proposition is you can chose to round up all of your expenditure to the nearest dollar or the nearest five dollars. For them to do that—they need to actually log into your account and get that data to work out what that value is going to be.
For us, it's something that we can't work with at this point in time but there's a lot of work being done in the financial sector within Australia with open banking, which will open the path to legitimately get access to one's financial data.
So the whole concept of each individual owning their own financial data and being able to authorize organizations to use it on my behalf is something that's going to be really powerful and I think it's going to change the way that services like Acorn's will work in the future.
Rob: So I sensed that our resident fraud expert, Marlene, your ears were pricking up there, Marlene, when we were talking about things like peer-to-peer lending and, you know, handing over bank details.
So from a fraud perspective—as our resident expert in that area—what are some of the concerns that you've got about some of the things that Dan's been talking about?
Marlene: I'll just touch, firstly, in relation to the benefits that Dan raised, as well, about the customer experience—being able to transact faster, being able to do things at any point in time, whether it's 3:00 a.m. or 2:00 in the afternoon. Everyone works differently and people like different levels of service and interactions, as well. So I think it's the way in which we are evolving and moving towards, which will bring great benefits.
However, there are risks as there always is with these sort of things. And you know, the other thing around Australians being slower adopters to some of these newer technology and ways of operating. The faster payments platform was introduced in the UK about 10 years ago, perhaps…
Marta: Sorry. Is that the New Payments Platform?
Marlene: …yeah, about 10 years ago and we're only starting to get up to speed in there, as well. It is, however, not immune to frauds and scams. Yeah, some of the types of fraud that we typical tend to see in this area are called your malicious misdirection scams.
Where victims tend to believe that they're paying someone that they know and is legitimate. But, instead, they're tricked into making a payment into another account because it mirrors the account that they believe they're paying into.
And malicious payee scams, as well, which are victims try to make a payment for goods or services that they…so online shopping, goods or services that you're promised. And what tends to happen is you actually make a payment into the scammers account and you don't receive your goods or services or they substandard or those sort of things.
Marta: So I guess, you know, in previous times…currently, now, when we do online shopping or we transfer money to people—it takes a few days and that's people's expectations. But when you're removing that timeframe, it can increase the risk that something can go wrong.
Marlene: That's correct. And some of the things around that as well, some of the risk that we need to be aware of. Things like, it takes the bank much less…or the bank needs a lot more time then what it actually take for that transaction to take place, to actually stop and question the transactions—so they need a lot more time to do investigations.
Whereas, historically, like you mentioned, they would have a couple of days to actually do that—sometimes a bit longer as well, depending on banking institutions. Now, they have probably less than a minute to actually do that, as well. So that detection capability has not yet come up to scratch, in terms of what we actually need to be able to identify these.
And the interesting thing is, we love the flexibility that it gives us, we love the experience that it gives us as well. But the big thing to remember in these scenarios is that banks are, generally, not liable for the losses where there's incorrect information or wrong account information given as well. So these scam sort of things were historically, because there's that turnaround time of a few days, the money hasn't actually gone through completely.
Whereas, now, because it's gone through in a matter of less than a minute and I think some of the banks, say, you know, a few seconds is what it takes to actually go through and you can't get the money so you actually don't get reimbursed where you potentially, historically, you would on the longer timeframe as well.
So even if they are able to track this to the fraudster or the scammer's account—what would happen? Is that you need to get the authority to get the money back in order to be reimbursed for those fraudulent funds so there is that knock that you end up taking as well.
Which goes back to how you actually secure your own passwords and your own banking details and things like that and actually going in fully informed, in terms of what the actual situation is.
Dan: Marlene, can I just ask you a quick question? You just mentioned just then that the banks are not liable for losses that are really incurred as a result of specific things. Do you think there's a misconception out there that the banks will always pay up so that's why I don't need to be diligent about my digital security?
Marlene: I think that's a large part of it, Dan. Because, historically, what would happen—even the bank would generally identify these issues, first. And the way in which they identify it is because they have factors that they're looking for or keywords that they're looking for in the transactions and that's outside of your typical customer profile for yourself, for instance.Whereas they would have had a couple of days to actually go through that monitoring process and pick up the anomalies? Now, they got…once you hit the button to send that moneys across, they money is gone in a matter of seconds and they're unable to pick that up. And when they do pick it up, it's on the back-end as well, so they're writing these and incorporating these into the terms and conditions of the account and the agreement when you sign up to actually go down this path and utilize the software or the platform, itself. So it's something to be fully aware of…
Marta: …and start reading the Ts&Cs?
Marlene: Exactly, right. Exactly, right…which is really quite interesting. And I think some of the things to look out for, particularly around the scams that are going around as well is, don't get caught up with the trickery that comes into it because there is a lot of that.
And some of the common methods that scammers use to ensure that you…hassle you to make a payment very quickly, as well, which comes into play, here, as well. Because the quicker you make a payment, the quicker it's gone through, and the less likely you are to recover those moneys, as well. And then, you are out-of-pocket for a number of these particular things.
And like I said, old fashioned trickery is the biggest source of financial fraud in this day and age, funny enough. And scammers tend to use text, email, phone calls. They use bullying tactics. They try to rush you over the phone call. And, you know, accepting emails and those sort of things that come through with links. The age old thing -- do not click on the link, you know? That's still really valid information because what tends to happen is that's the way they can pick up personal information.
Because with the New Payments Platform, you know, your user name or…I'm not sure what it's actually called but you actually utilize…yeah, your pay ID, you actually utilize your phone number or your email address. And if you are setup in that way, as well, they can use that to mirror your actual account, yet, redirect the funds to an underlying bank account that's not yours, as well.
Dan: We're finding that those emails are looking a lot more legitimate than what they used to a few years ago -- so a lot less typos. Sometimes, you can't even tell by just looking at it, these days.
Whereas in the past, you could take a glance and say, "That obviously doesn't look right." Yeah, it's going to get very interesting in this space.
Marlene: It is. Because, now, they can actually even clone or mirror email accounts that look very similar to something you're expecting from an actual organization, as well. But it's about bearing in mind, looking for those anomalies. You know, if you're not expecting something, don't click on the link. You'd rather just pick up…if it's a company—call their direct line on an established number that you know. Things like emails, don't click on the links. Just call them up.
And if it's a legitimate email from a company, then there's no harm done and they'll actually appreciate that as well because it's a hassle for them, as well, as part of the process.
Lyndon: So a lot of people are already using these kinds of new apps and new services and things. And I guess, there are more of us in the world, now, so obviously, the incidents of scams and fraud and all that sort of stuff is going to increase, naturally.
Do we have any kind of sense of whether, like how often these things happen? Yes, they happen but how often do they happen and what's the level of risk that that might happen to you?
Marlene: Look, based on historic stats—it happens every second of the day. And they're using botnets more and more. So you know, the robo-technology…while our technology for security and those sort of things are changing and enhancing—the fraudster tend to amend their strategies based on that as well. Because they, too, have AI. They, too, have access to monitoring software and those sort of things. They're quite tech savvy and sometimes they just go back to age old things like paper-based stuff. They send you a letter, instead. They'll make a phone call, instead—those sort of things—whatever way they can actually get across to you.
So the scams are happening all the time, the issue is that like Dan said, even emails are looking so legitimate these days that you don't even know you are being scammed until you are…it's happened to you. And what you find is sometimes people don't own up to it because they'll just be at a loss because it's a bigger source of embarrassment to admit that you've been scammed or something like this has happened to you -- so you won't find most of them reported as…
Marta: But it's a shame. Because I think the more you share those stories, the more likely someone else will be a little bit more aware and go, "Okay, if anything comes up, now, I know that that's out there. I'll ignore it or delete it."
Marlene: Exactly, right. And I think one of the biggest things…sorry, the two big things, recently were with things like the ATO scams where people have been calling random people and saying, "Oh, you owe ATO money. Get an iTunes gift card…" all these sort of things.
And, also, the other is the emails with the links, the AGL polls that's been coming around. People have been getting them. They get through company firewalls and those sort of things so it's not just those particular ones.
Those are the ones that are more likely to come through but as we catch on that that's what the fraudsters are doing they change the way of operating, again. And they, generally, tend to target particular people of a certain age/certain demographic—that generally tends to happen, unfortunately, as well.
Rob: Marlene, I’ve got an email from an Arabian Princess back at my desk. It looks legitimate to me but I might get you to cast your eye over it…
Marlene: …it doesn't sound suspicious—no, no, no.
Rob: I didn't think so. And this is a question for both of you, Dan and Marlene. What basic tips can you give our members who are doing, you know, online banking or just general side of security, sort of tips for them to be vigilant and in control of what they're doing?
Marlene: Look, I would think, you know, in terms of at home—is ensuring that your homework and your home Wi-Fi are safe. You don't have any unsecured Wi-Fi access, so make sure you have passwords.
Really strong passwords as well is really important because anything could happen at home. And once you're infiltrated at home, there's a lot of…just think about the data and information that you keep on your system. Make sure your passwords are strong.Don't ever feel rushed into doing so if you get a phone call or an email—don't feel like you need to address it then and there and quickly transfer the money across.
Just make sure that you do your due diligence and it will…it'll be better for you, in the long run, even if you delay a little bit and then get that done.
Dan: Just one little tip that might be worthwhile mentioning is, Google is a source of lots of information. So if something doesn't quite look right, a lot of people may have posted articles about that on Google, so it's a very good starting point…
Marta: …there are a lot of peer forums like Whirlpool and that kind of thing, where people will write about their experiences. Like, I sometimes use that to double check and see what people have said about certain things.
Marlene: Exactly. And things like the watch scam website, as well. It very easily pops up—what are the latest scams that are coming across? And these are all mostly bullying tactics, just to get money out, just to pressure you to giving personal information as well, so they're all good resources to use, actually.
Marta: So while we should embrace technology and working with open arms, let's read the T&Cs, and protect, and change our passwords every so often.
Dan: …strong passwords.
Marlene: Yeah, strong passwords. Protect yourself because the technology is fantastic, you know. Yeah, great experiences and that's what we're all trying to achieve at the end of the day.
Rob: Well, Dan and Marlene, thank you so much for joining us, here, on Super Informed Radio. We have enjoyed your insights. And I hope our members have, too.
Dan: Thanks very much.
Marlene: Thanks for having us.
Marta: So guys, I know it's a lot to process there from Dan and Marlene. But I think it's important for you, our listeners, to remember, we're not trying to scare you off on any of these kinds of things. We just make sure you do your research and read up on it before you sign the dotted line.
Lyndon: And that's all for this episode of Super Informed Radio. Thanks so much or tuning in. You can catch up on past episodes at unisuper.com.au/podcast or subscribe to us through any good podcast app. And we'll see you next time.
Rob: See you later.
Marta: Bye for now!