Open banking set to give NZ customers a fairer deal

Open banking is now being introduced in New Zealand, with the Government saying the move will increase bank competition and deliver a better deal for New Zealanders.

Minister of Commerce and Consumer Affairs David Clark confirmed the move today in a statement, saying that it follows many other countries around the world.

"Open banking ensures 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," he says.

"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 common place tool used overseas to increase competition and make it easier for customers to get better deals."

Last July, the Government agreed to establish a consumer data right framework (CDR) which would require data holders like banks to ensure New Zealanders can gain access to a wider range of products and services that better meet their needs. It has now been announced banks will be the first sector to implement the mechanism.

"Under open banking if somebody wanted 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," says Clark.

"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."

He says that open banking will allow more transparency and further incentive to do right by customers.

"The key point is that open banking allows customers to shop around for better deals. That means banks will also have to work harder to retain their customers, leading to savings for consumers.

"At a moment in time where cost of living is high around the world, consumers should have the power to shop around for better deals, and make sure they're getting the best bang for buck out of their investments.

He says Prime Minister Jacinda Ardern has made efforts to create a fairer market climate by urging banks to do right by customers and that open banking will be an extra tool to help this process. 

"The Prime Minister has 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 an additional tool to promote competition and ensure consumers are getting a fair deal," says Clark.

"The banking sector is a natural starting point for rolling out consumer data rights, as the industry has already made significant progress towards open banking on their own. Banking was also the first sector designated in Australia so we can learn from them."