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New Zealand to introduce Open Banking

Monday 14 November 2022 13:57 CET | News

The New Zealand government has announced its intention to increase bank competition and deliver a better deal for New Zealanders with the introduction of Open Banking.

 

New Zealand announced its intention to increase bank competition and deliver a better deal for New Zealanders with the introduction of Open Banking.

 

In July 2022, the country’s government agreed to establish a consumer data right framework (CDR) which would require data holders such as banks to enable New Zealanders to gain access to a bigger array of products and services that better meet their needs. The government’s recent announcement points to banks as the first sector to implement the mechanism. The country’s Minister of Commerce and Consumer Affairs declared that Open Banking dictates that banks must share customer information if they request it, making it easier for New Zealanders to compare mortgage rates, apply for loans, and switch banks, the official press release states.

The government official continued to say that ‘Open Banking is a requirement on the Australian-owned banks’ parent companies ‘across the ditch’ and is a fixture of the banking system in the UK. It’s a commonplace tool used overseas to increase competition and make it easier for customers to get better deals’. According to him, Open Banking allows people to ‘re-fix their mortgage at a lower interest rate, they could ask their bank to securely share transaction information, with a competitor. They could also instruct their bank to share specific data with a financial adviser of their choice – meaning more tailored and timely advice’. The press release continues to say that the businesses and services wishing to receive this data would have to meet a number of safeguards to ensure the information could be handled safely and securely.

Banks – the first to try Open Banking

According to the New Zealand government’s official, the key point is that Open Banking allows customers to browse for better deals, meaning that banks will have to increase their efforts to retain their customers, while consumers could benefit from savings. He also mentioned that during the current cost of living crisis, which is ‘high around the world’, consumers should be able to shop around for better deals and make sure they’re getting the best cost-to-quality ratio out of their investments.

The press release continues by saying that New Zealand’s Prime Minister urged banks that are reporting record profits to do ‘what’s right’ for their customers and help them out in challenging times. Open Banking is seen by the country’s government as an additional tool to promote competition and ensure consumers are ‘getting a fair deal’. 

Last but not least, the government official acknowledges that ‘the banking sector is a natural starting point for rolling out consumer data rights’, since the industry has already made reportedly significant progress towards Open Banking on its own. New Zealand can get inspiration from Australia, since banking was also the first sector designated for Open Banking in Australia. The press release concluded by saying that some banks in New Zealand have proactively started building the infrastructure to facilitate a CDR.


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Keywords: Open Banking, regulation, banks
Categories: Banking & Fintech
Companies:
Countries: New Zealand
This article is part of category

Banking & Fintech