Flybuys will raise its cyber security spend as hackers attack businesses

The nation’s largest loyalty program will spend big to protect the huge cache of personal data it holds as hackers plague corporate Australia.

The nation’s largest loyalty scheme, Flybuys, is considerably upping its investment in cybersecurity to protect the personal data of its 8m members amid the hacking scandals that have engulfed the country and businesses such as Optus and Medibank.

Given the massive size of the Flybuys membership base – it has almost the combined customers of Optus and Medibank – it is demanding a lot of attention and resources from the group.

In the latest Flybuys 2022 financial accounts the directors report confirmed it had “significantly increased investment in cyber security to help protect the company’s and members’ data.”

According to financial documents, Flybuys spent $32.62m on technology in 2022, which would include money spent on cybersecurity, up strongly from $23.15m technology costs incurred in 2021.

Flybuys is looking at its cybersecurity as hackers continue to target Aussie businesses.

With the recent introduction of Bunnings and Officeworks to the Flybuys scheme the loyalty program now has 23 partners where members can earn and redeem points – and also where personal data is collected – including chains such as Liquorland, Kmart, Target, Coles, Virgin Australia, and Catch.

It means that Flybuys members have access to approximately 20 per cent of all retail expenditure in Australia, and conversely represent a huge pool of personal and financial data that could prove a tasty target for cyber criminals.

Flybuys chief executive Anna Lee would not disclose the split of its technology budget and how much was devoted specifically to cyber security, but said the expenditure on protecting its customer data from hackers was growing.

“As one of Australia’s most trusted loyalty programs, protecting our member data remains a top priority at Flybuys. We continually review and improve our data collection and security infrastructure, and this additional investment is reflective of that commitment to our members,” she said.

“As cyber security threats continue to evolve, so too does our investment in this space. It’s incumbent on us to not only provide the best experience possible for our members, but ensure that experience is backed by the core systems that will help protect our members.”

Flybuys CEO Anna Lee will oversee the increased investment in cybersecurity. Picture: Supplied

Flybuys is jointly owned by Coles and its former parent company, Perth-based conglomerate Wesfarmers. Its directors include Coles chief executive Steven Cain, who is also the loyalty program’s chairman, and Wesfarmers CEO Rob Scott.

The quickly expanding technology and cyber security budget that has gripped Flybuys is becoming typical of many corporations that are viewing the current plague of data hacking cases in Australia with a heightened level of fear and alarm.

Last week Macquarie Group chief executive Shemara Wikramanayake said when issuing its interim results that the financial services and investment company’s annualised technology, cyber security and IT budget had grown in the last five years from $1.3bn to as much as $2.5bn.

“Like many of our peers we have been actively investing in this area for a very long time,” Ms Wikramanayake said at the bank’s interim financial results presentation.

“We get many attempted (cyber) breaches, daily in fact, so far we have had nothing penetrated, but you just can’t be complacent in this area because the technology keeps improving, the forms of attacks keep changing, so I think we individually are kind of being vigilant as possible, learn from everybody keep investing.”

It comes as in the last few weeks Optus had admitted that more than 2.1m of its customers had their data accessed or leaked to cyber hackers while Medibank revealed all its 2.9m customers had their personal data accessed – including sensitive personal health information – which in one day wiped $1.8bn from its market capitalisation.

Meanwhile, Flybuys continues to benefit from the end of lockdowns and travel restrictions imposed in the first two years of the Covid-19 pandemic with the value of its points being generated up sharply in fiscal 2022.

According to its latest annual report revenue rose 28.4 per cent in fiscal 2022 to $391.9m – which included $341.9m revenue from points paid to Flybuys from its retailer partners – as the end of lockdowns and travel restrictions saw a rebound in consumer spending and other activities that generated more points being redeemed.

Loyalty Pacific, the company that houses Flybuys, reported a lift in net loss to $14.9m, up 38.2 per cent from the $10.8m loss posted in 2021, although the business is not run to earn a profit but rather support Wesfarmers and Coles with a loyalty program.

Originally published as Flybuys will raise its cyber security spend as hackers attack businesses