Exploring open banking’s future

Kia ora,

This year, our members face challenges and opportunities regarding the progression of open banking and by inference opening up competition.

New Zealand has generally adopted the ‘diplomat’ approach to financial services and open banking. For example, a market-driven, bottom-up, hands-on approach where the industry is providing the standards and process for voluntary adoption of open banking. As this is generally voluntary, it is prone to non-standardisation of the structure, the depth of opportunity and standardised API providers and their interfaces, access, and to some extent incentives to innovate. It also favours bigger players, subsequently impacting competition. This is different from Australia and the United Kingdom (UK) which have adopted the ‘commander’ approach. Both have a top-down, standardised, mandatory approach that is regulator-driven and tends towards strong legal, security and technical frameworks. The rationale of this approach is to drive industry innovation and competition. So, noting this positioning, it is realistic to anticipate our local approach continuing, as we have seen with the work underway with PaymentsNZ and the API centre.

However, in my view, we require clarity from the Government on its role and intentions as regards the proposed consumer data right (CDR) legislation. While open banking isn’t a cure-all for innovation, it certainly boosts confidence in fintech product development, partnerships and investment.

What indications are we seeing?

Last month, during an address to the Insurance Council of New Zealand (ICNZ) the Hon Andrew Bayly indicated an intention to resume legislation discussions. However, specifics and timelines remain uncertain. Meanwhile, we’re seeing some adjustments, for example, updating the Credit Contracts and Consumer Finance Act (CCCFA). At present, the approach is to largely adjust the boundaries with existing legislation and priorities. In a recent announcement, the Government says it will reform financial services in a bid to make it easier to get home loans and other lending and strengthen customer protections. Read more.

What are the timelines and actions?

The Commerce Commission has recommended the designation of the interbank payment network to facilitate CDR payments. Next month’s 30 May deadline sees data holders ANZ, ASB, BNZ and Westpac needing to be ready with the payments initiation API standard to enable access for the API’s to be opened to fintechs. Once complete, this is anticipated to bring potential coverage of more than 90 percent of consumer bank accounts

On the Commerce Commission front, we will see the conclusion of the investigation into personal banking with the final report due for publication on 20 August. Its recommendations may also trigger changes in legislation.

As the year progresses and changes are implemented, we will continue to provide data and insights including the upcoming regional open banking report led by FinTech Australia and Mastercard. 

In other news, if you haven’t already secured your space, register now and join us on Wednesday 8 May in Auckland for our next Connect Event: Start-up to scale. In case you missed it, check out the 2024 New Zealand Fintech Pulsecheck report here, plus join us at TIN’s 2024 Fintech Report launch on 23 May in Auckland. Register here.

Over the coming weeks, you will receive a member survey seeking your feedback on where we should focus our international trade and potential delegations. We’re also working on creating dedicated spaces to promote fintech success. Read on for what’s on offer in Auckland, planned for Wellington and a proposed renewal of the CreativeHQ fintech accelerator. For more information, please see below or contact me.

Ngā mihi nui
Jason Roberts
Executive Director

PS: Support Kiwi’s heading to SXSW in Sydney in October and vote for crypto to be part of the conversation. Read more.

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