New Zealand green lights open banking
The New Zealand government is seeking submissions on what a consumer data right could look like effectively paving the way to finally introduce open banking.
New Zealand’s Ministry of Business, Innovation and Employment is seeking feedback on how a consumer data right should be designed as it aims to help consumers take better control of their data.
The government body said a consumer data right could provide “significant benefits for consumer welfare and economic development,” by allowing them access to a wide range of products and services reduce search and switch costs and foster competition.
The CDR is also the key plank in Australia’s open banking framework but unlike Australia, the New Zealand open banking framework will be industry led not mandated.
“By starting consultation on the CDR, it seems New Zealand is now down the path towards open banking. It's a positive initial first step,” RFi Group head of consulting Alex Boorman said.
With Australia already implementing open data, Boorman sees scope for Kiwis to learn from Australia particularly as both the banking industries mirror both markets.
In fact at an RFi Group event in Auckland, New Zealand bankers were even looking at Australia’s approach to open data that included the energy and telecommunications sectors.
“Wouldn’t it be nice to think of open data like a flower where you can blow the petals and see them disperse across that different industries and then appreciate the different value propositions that come from that.” Westpac’s Auckland-based Matt Haigh said at the time.
However, there are challenges that can also be learnt.
“I still remain optimistic about the potential benefits to open banking in any markets,” Boorman added.
“But the experiences in other markets including Australia highlights that consumer behaviour does not change overnight.”
He said that the success of open banking in any market would always come down to the messaging around how consumer concerns are addressed with regards to privacy and security of information.
“Inevitably open banking can put some really, really sexy propositions in front of consumers.
“But you are dealing with two extremely valuable currencies when it comes to open banking – money and personal data.
“Open banking really brings both of them together and asks consumers to do something different, to behave differently than they've ever behaved before.”
Scope for Australian fintechs?
For RFi Group deputy general manager Kate Wilson, New Zealand is an interesting market given its high rates of digital adoption and good digital services being offered by the major banks.
In fact RFi Group data shows that 80 per cent of consumers in New Zealand access digital banking a least once a week - compared with 74 per cent of consumers win Australia and 68 per cent in the UK.
Whether there is scope for fintechs to tap into another market, Wilson said the size of the market be a barrier to neo-banks from entering the market, especially those already established overseas who are more likely to see opportunities to expand into the US.
However she said there is definitely a role for fintechs to play in driving innovation in the market.
Here partnerships between traditional providers and fintechs would be the best strategy in delivering good customer outcomes through Open Banking.