The New Zealand Government has announced that it will introduce open banking in the sector, giving consumers full control of their financial data. 

Open banking is the practice of allowing third-party payment services and other financial service providers to access banking transactions and other data, enabling secure interoperability in the banking industry. This will also provide customers and third parties easy digital access to their financial data.

The practice is already in place in a number of markets overseas, including Australia and the United Kingdom.

“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,” Minister of Commerce and Consumer Affairs David Clark said. 

“It 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.”

Minister Clark also states that an individual could ask their bank to securely share transaction information or specific data with a financial adviser of their choice under open banking. Better data management brought by open banking potentially brings more tailored and timely advice.

Last July, the NZ 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.

Proponents of “open banking” say it may allow consumers to share their data with other providers to get better and cheaper services than what they already have. 

Minister Clark states if customers can shop around, 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,” he sai

The NZ Government said they expect the work to implement “open banking” to take up to two years. 

Source: Reuters. Content has been edited for style and length.

Eliza Sayon

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Eliza is a content producer and editor at Public Spectrum. She is an experienced writer on topics related to the government and to the public, as well as stories that uplift and improve the community.

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