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New Zealand

Open Banking

A consumer data right in New Zealand seeks to give consumers greater choice and control over their data.

As of 2021, 94% of New Zealanders were active internet users. The World Internet Project of 2021 found that 40% of users reported being contacted by someone online asking for bank or personal details, although most users who had their privacy violated online reported that it was ‘not really a problem’, or ‘minor in nature’. 6% of responders were non-users of the internet (either they never used, or hadn’t used the internet in the prior 3 months). The highest proportion was in the over 65s, of which 16% were non-users.

The lowest income category, that of up to $30,000, were the highest non users at 13%. There was no evidence of an urban / non-urban divide.

For people who did not use the internet, the most used reason was that they thought it had no purpose (the over 65s most citing this reason). Other relatively popular reasons were that the responder felt they were too old, they were suffering from an illness or disability or that they didn’t have enough knowledge to use the internet. A third of non users stated that nothing would help to make them use the internet. 17% said understanding the benefits might entice them to use it.

In July 2021, the government announced they would be establishing a consumer data right in Aotearoa New Zealand, to take effect from the second half of 2022. This consumer data right will allow consumers (individuals or companies and other entities) greater choice and control over their data by being able to securely share data that is held about them with trusted third parties, using standardised data formats and interfaces. It aims to allow consumers to have greater trust that their data is shared safely and for their benefit, with their knowledge and consent. The government sees a consumer data right as providing significant benefits for consumer welfare and economic development. Some of the stated benefits include strengthening existing privacy protections, giving access to a wider range of products and services, reducing search and switch costs, facilitating competition, encouraging innovation, increasing productivity, and helping to build the digital economy. 

The announcements surrounding the design and implementation of the consumer data right were expected in 2022 with the banking, electricity and telecommunications sectors anticipated to be designated early on. If the Aotearoa New Zealand consumer data right bears any resemblance to the Australian model, then it is expected that the banking and financial services sector will fall under the new regulations, with the aim of creating a regulated and mandated Open Banking ecosystem.

As of October 2023, Payments NZ – the country’s payments system regulator – has set a deadline of May 2024 for the four major banks (ANZ, BNZ, ASB, and Westpac) to implement Open Banking. Kiwibank is expected to join in 2026.

It is expected that New Zealand will take a more market-driven approach, leaving technical implementation and incentive structures to be decided by the market.

New Zealand is looking towards the UK in how they develop their Open Finance model, particularly in how Open Finance participants must take care to ensure users understand how their data is used. In particular, the Competition and Markets Authority review into the future of governance and oversight of Open Banking remedies in the UK will be followed, and any findings are taken into account for the CDR proposal in New Zealand.

The indications are that New Zealand is keeping a close eye on Australia’s development of a CDR, and the advances into Open Finance in the UK, hoping to learn from, and incorporate best practices from both. The issue of both cross-border and cross-industry interoperability are highlighted, to allow for efficiencies for businesses and the future development of standards.

FinTechNZ has been exploring attitudes towards Open Finance, making use of Clarity Insight research. According to this, more than 80% of people were not aware of Open Finance. Once the principle was explained, 60% were reluctant to the idea of engaging with Open Finance at all. Issues of data trust and the use of their data were the main hesitancies. New Zealanders with more financial freedoms were most comfortable with the Open Finance idea, with the most financially vulnerable the least.

New credit laws, under the Responsible Lending Code, came into force in December 2021 in New Zealand and may make it harder for people to access credit. The rules require lenders to ask for additional details when it comes to assessing affordability, these rules are designed to ensure that the credit awarded is affordable. However, it may make it harder for people to access the credit they have easily accessed in the past. There is potential for Open Finance to give personal debt advice with a dynamic view of a consumer’s financial situation and increase responsible lending. 

Findings from a Community Engagement Pilot (November- December 2021) for Open Banking for Aotearoa New Zealand found that potential consumers wanted to know who is responsible for data breaches, and they wanted to see an independent body with oversight of regulations, who would act for parties who had grievances and had ‘teeth to be able to act against wrongdoers’.

New Zealand is developing a Digital Identity Programme, to reduce authentication barriers that arise with multiple partners. It is hoped that this might be rolled out in advance to adopt Open Finance.

A 2024 report by the Commerce Commission highlighted that some customer demographics are more affected by the lack of competition in personal banking services than others. It is the hope that Open Finance will play a role in alleviating this discrepancy.

New Zealand must consider the principles of Te Tiriti o Waitangi, and the principles of the Māori Data Sovereignty Network as it develops Open Finance. Its understanding of indigenous economic and financial issues is being supported by the Reserve Bank of New Zealand, in conjunction with the Reserve Bank of Australia (RBA), and Bank of Canada, with an aim of using Indigenous data respectfully and fostering inclusion with member organisations. The Māori data governance (MDG) model forms a voluntary network with indigenous partners.

In March 2024, Health New Zealand launched their first API standards for the health care sector.

The industry working group FinTechNZ reported in March 2022 that the Fintech sector in New Zealand is growing at 31% annual compound growth. They recommend developing a framework for Open Finance. Their vision stretches Open Finance to more than an extension of Open Banking to cover a broader swathe of third-party providers, financial sectors and products, and to include improved integration of payment, accounting and lending platforms for internal management, leading to greater cash flow control.

FinTechNZ feels that New Zealand has several advantages in developing Open Finance. Its closed ecosystem, multicultural environment, and remoteness allows New Zealand to test quickly and scale globally. However, New Zealand’s banking market is dominated by four Australian banks – ANZ, Commonwealth Bank, NAB and WestPac – who own 85% of the market. The ‘big four’ banks reported a record-breaking NZ$5.49 billion in after-tax profit in 2021. The advantages in promoting financial wellbeing to customers cannot be exploited while the banks guard their data to protect their current customer relationships.

The 2021 Regulatory Impact Statement on the consumer data right stated that these structural barriers are hampering non-incumbent providers, and new entrants to the market are struggling to get a foothold on the market, thus stifling new innovation. It reported that some businesses had chosen to leave New Zealand due to high barriers to entry and expansion, driven by an inability to access data.

The 2021 Global Fintech Index showed New Zealand Fintech is now ranked 30th out of 83 countries – up 15 places since the last review. 

The API Centre has a development space where under development standards can be commented upon by standard users, and release candidate standards are open to be critiqued by community contributors, generally New Zealand developers or relevant organisation representatives.

Access is also possible for registered community contributors to the API standard sandbox to support their proof of context.

Code specifications and standards documentation are also provided through the API Centre.