Latest / What the Flux / CommBank dobs itself in to police | Woolworths’ AI goes rogue | Budget Direct's 'vanishing' discounts

Transcript

CommBank dobs itself in to police | Woolworths’ AI goes rogue | Budget Direct's 'vanishing' discounts · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm justin and a fun day the
• 0:08
  Speaker 2: second of March.
• 0:09
  Speaker 1: Boy. We spoke on Friday about Wistech wiping out two
• 0:12
  Speaker 1: thousand rolls over the next two years thanks to AI,
• 0:15
  Speaker 1: but now Block, the company that owns Afterpay is going
• 0:18
  Speaker 1: even bigger. It has plans to cut forty percent of
• 0:21
  Speaker 1: its workforce from ten thousand down to just six thousand
• 0:24
  Speaker 1: because of its embrace of AI.
• 0:26
  Speaker 2: Big moves made by Jack dawks'd man Yeah Fux app
• 0:29
  Speaker 2: as we chick off the brand new month. Now is
• 0:31
  Speaker 2: the perfect time to be checking whether you're still paying
• 0:33
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• 0:35
  Speaker 2: and years ago you're not using anymore. In the Flux app,
• 0:38
  Speaker 2: we have a subscription tracker that identifies all of your
• 0:40
  Speaker 2: subscriptions in the one space and helps you identify which
• 0:43
  Speaker 2: ones you can cancel. If you want to save some
• 0:45
  Speaker 2: money this month, make sure to download the Flux app
• 0:47
  Speaker 2: and check out the subscription tracker.
• 0:48
  Speaker 1: Three monstrous stories today, Dozy boy, let's do it for
• 0:51
  Speaker 1: our first. Commonwealth Bank has dabbed itself in after spotting
• 0:55
  Speaker 1: one billion dollars in home loans were backed by dodgy
• 0:58
  Speaker 1: AI generated documents.
• 1:00
  Speaker 2: Homeland applications just got a little GBT, so tell me more. So.
• 1:04
  Speaker 1: Combank is Australia's biggest bank and one of the biggest
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  Speaker 1: companies in all of Australia.
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  Speaker 2: We're talking more than twenty five million customers and more
• 1:11
  Speaker 2: than ten billion dollars in profit last financial year. Blah
• 1:14
  Speaker 2: blah blah.
• 1:15
  Speaker 1: Now Combank has referred itself to police and ASSEK and
• 1:19
  Speaker 1: why is that? That's because they've identified up to one
• 1:22
  Speaker 1: billion dollars in potential fraudulent home loans.
• 1:24
  Speaker 2: And be Man. This wasn't old school wide out and
• 1:27
  Speaker 2: photoshop staff.
• 1:28
  Speaker 1: Now some applications allegedly used AI generated pacelips, draft tax
• 1:33
  Speaker 1: returns and wait for it, fake income documents to secure
• 1:36
  Speaker 1: loans and be man.
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  Speaker 2: Interestingly, there was a major focus on broker and other
• 1:40
  Speaker 2: referral channels.
• 1:40
  Speaker 1: The good news for CBA well, most of these loans
• 1:43
  Speaker 1: are still being repaid and are secured against property, so
• 1:46
  Speaker 1: CBA isn't currently out of pocket. But the band news
• 1:48
  Speaker 1: this isn't just one or two false documents.
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  Speaker 2: No, no, no, this is at scale, so it raises serious
• 1:53
  Speaker 2: questions about lending controls. But mainly broker oversight.
• 1:56
  Speaker 1: Interesting, So what is the key learning here?
• 1:58
  Speaker 2: Growth through intermediary can accelerate revenue, but it also multiplies
• 2:02
  Speaker 2: the oversight risk.
• 2:04
  Speaker 1: We know that banks don't originate every home loan themselves.
• 2:07
  Speaker 2: In fact, a large proportion come through mortgage brokers and
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  Speaker 2: other referral partners like accountenance or real estate agents.
• 2:13
  Speaker 1: Get this one. The broken channel now makes up more
• 2:15
  Speaker 1: than seventy seven percent of all new loans originated, and
• 2:18
  Speaker 1: that is as of the September quarter in twenty twenty five.
• 2:21
  Speaker 2: The good part for banks is that this model expands
• 2:23
  Speaker 2: their distribution and brings in more customers.
• 2:25
  Speaker 1: Less people actually working for the bank but still making
• 2:28
  Speaker 1: sale but.
• 2:29
  Speaker 2: Of course be man without the overriting control of these brokers.
• 2:32
  Speaker 2: It also introduced incentive risk.
• 2:34
  Speaker 1: Yeah, brokers are typically paid upfront commissions when a loan
• 2:37
  Speaker 1: sales plus a trail, so there's a clear.
• 2:39
  Speaker 2: Financial incentive to get the deal across the line.
• 2:41
  Speaker 1: In most cases this works fine.
• 2:43
  Speaker 2: But in some rare cases and clearly not so rare
• 2:46
  Speaker 2: right now, incentives can encourage brokers to cut corners in
• 2:49
  Speaker 2: flight income figures, or ignore inconsistencies altogether.
• 2:52
  Speaker 1: For our second story, Woolworth's AI assistant Olive has gone
• 2:57
  Speaker 1: rogue and shoppers are not loving the family drama.
• 3:01
  Speaker 2: You go online to reschedule a grocery delivery and somehow
• 3:03
  Speaker 2: you end up in a therapy with the chatbot. Don't
• 3:06
  Speaker 2: tell me more so.
• 3:07
  Speaker 1: Woolworth's Group is Australia's biggest supermarket chain, and financially it's
• 3:10
  Speaker 1: back to its humming best yep.
• 3:12
  Speaker 2: Just last week it reported earnings up more than fourteen
• 3:15
  Speaker 2: percent in the first half of the financial year and.
• 3:17
  Speaker 1: Sales rising to over thirty seven billion bucks for the
• 3:20
  Speaker 1: half alone.
• 3:21
  Speaker 2: But be man, that ain't the story today, because back
• 3:23
  Speaker 2: in twenty eighteen, will These Digital arm Will These X
• 3:26
  Speaker 2: launched its AI chatbot, Olive.
• 3:28
  Speaker 1: The mission here was to handle all the boring stuff
• 3:30
  Speaker 1: store hours, refunds, delivery tweaks.
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  Speaker 2: But instead Olive started oversharing yep.
• 3:36
  Speaker 1: Lately, customers have reported that Olive has been rambling about
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  Speaker 1: its mother.
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  Speaker 2: And making odd typing noises all the while during the
• 3:43
  Speaker 2: time when people just wanted to move their groceries from
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  Speaker 2: four pm to six pm.
• 3:47
  Speaker 1: Yeah, Wooly said the awkward behavior came from old scripted
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  Speaker 1: responses written to make Olive feel more human.
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  Speaker 2: And those scripts have now been removed.
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  Speaker 1: But it hasn't stopped old woolies. In fact, they've been
• 3:57
  Speaker 1: doubling down on AI, recently partnering with Google two upgrade Olive.
• 4:01
  Speaker 2: Yeah, seems like Olive needs an upgrade. The goal is
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  Speaker 2: to developed more advanced capability like meal planning and even
• 4:07
  Speaker 2: building a cart from a photo.
• 4:09
  Speaker 1: And not trauma dumping on its customers about its family issues.
• 4:13
  Speaker 2: So what is the key learning here?
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  Speaker 1: Customer service isn't just a cost center, it's a key
• 4:18
  Speaker 1: brand touch point.
• 4:19
  Speaker 2: I mean, man. The irony is the companies often roll
• 4:21
  Speaker 2: out AI to feel more modern and customer centric.
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  Speaker 1: But if it feels inauthentic or unreliable, it can quickly
• 4:27
  Speaker 1: ruin the very trust they're trying to build.
• 4:30
  Speaker 2: And this isn't the first AI flop.
• 4:32
  Speaker 1: Now, remember when McDonald's scrapped an AI drive through after
• 4:36
  Speaker 1: it kept adding hundreds of markets to every order.
• 4:39
  Speaker 2: Or what about when Air Canada was forced to honor
• 4:41
  Speaker 2: a bereavement discount It was invented by its AI chatbot.
• 4:44
  Speaker 1: So AI might promise efficiency and cost savings, but when
• 4:48
  Speaker 1: it comes to the frontline of your brand, it also
• 4:50
  Speaker 1: becomes the frontline of your reputation.
• 4:53
  Speaker 2: For our third and final story. Budget Direct has landed
• 4:56
  Speaker 2: in some hot water after Asak alleges vanishing discounts for
• 5:00
  Speaker 2: thirty nine thousand of its customers.
• 5:02
  Speaker 1: Nothing like a discount that disappears faster than your no
• 5:05
  Speaker 1: claims bonus. Tell me more.
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  Speaker 2: Okay. So Budget Direct is the low cost insurer that's
• 5:09
  Speaker 2: owned by Auto in General. They are for car insurance
• 5:11
  Speaker 2: and home insurance, motorbike insurance all across Australia.
• 5:14
  Speaker 1: It built its brand on competitive pricing and those save
• 5:17
  Speaker 1: up to thirty percent style discounts.
• 5:19
  Speaker 2: But now be man Ascic alleges the Budget Direct has
• 5:22
  Speaker 2: been pulling some swifties on its customers. Whether it's pricing.
• 5:25
  Speaker 1: You have Ascic alleges that Budget Direct removed advertised discounts
• 5:28
  Speaker 1: after customers made small changes to their policies.
• 5:31
  Speaker 2: You want update your address, you lose your discount or
• 5:33
  Speaker 2: if you.
• 5:33
  Speaker 1: Want to swap your car, discount gone and after thirty
• 5:36
  Speaker 1: nine thousand customers were allegedly affected and Joe boy Acid
• 5:39
  Speaker 1: claims senior staff were aware of the issue as far
• 5:42
  Speaker 1: back as twenty sixteen, but failed to fix it or
• 5:45
  Speaker 1: inform their customers.
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  Speaker 2: So now Budget Direct will repay affected customers to the
• 5:49
  Speaker 2: tune of three point three million bucks.
• 5:51
  Speaker 1: And clearly, pricing transparency has become a key focus for
• 5:53
  Speaker 1: Assic in the insurance space. So what is the key
• 5:56
  Speaker 1: learning here? In financial services? Your headline price isn't just marked,
• 6:00
  Speaker 1: it's your promise to customers.
• 6:02
  Speaker 2: We know that discounts are often the hook that gets
• 6:04
  Speaker 2: customers across the line, but if.
• 6:06
  Speaker 1: That hook changes after sign up, even unintentionally, regulators view
• 6:10
  Speaker 1: that as potentially misleading conduct. If customers can't rely on
• 6:13
  Speaker 1: headline pricing, the entire comparison based insurance market breaks down.
• 6:17
  Speaker 2: And bevan Atik has been cracking down hard on misleading pricing.
• 6:20
  Speaker 1: In fact, insurance were forced to repay eight hundred and
• 6:22
  Speaker 1: fifteen million dollars to five and a half million consumers
• 6:25
  Speaker 1: back in twenty twenty three alone because of pricing failures.
• 6:28
  Speaker 1: So clearly ACIK is clamping down on these practices, and
• 6:31
  Speaker 1: right now Budget Direct is in the firing.
• 6:33
  Speaker 2: Line fluck time. I can guarantee you if you check
• 6:35
  Speaker 2: your subscriptions in the Flux subscription tracker, you will find
• 6:38
  Speaker 2: one that you did not even know you're paying for.
• 6:40
  Speaker 2: We hear it all the time from our customer saving
• 6:42
  Speaker 2: twenty bucks here a month, thirty bucks they're a month
• 6:44
  Speaker 2: and hundreds per year, so if you want to save
• 6:46
  Speaker 2: money to kick off March, make sure to download the
• 6:48
  Speaker 2: Flex app and check out the subscription tracker.
• 6:50
  Speaker 1: Thanks for listening, and we'll see you on Wednesday.