New Zealand‘s big banks are making cautious progress towards open banking. — Bloomberg
WELLINGTON: New Zealand should consider an accreditation regime for emerging financial technology (fintech) firms if it wants open banking to get support from consumers, according to Westpac New Zealand chief executive office Catherine McGrath.
Open banking lets consumers share their financial information with third parties, theoretically making it easier for customers to switch between lenders to get better deals.
That will encourage incumbent banks to be more competitive and will allow new entrants into the industry, according to a recent Commerce Commission report into banking competition.
“We need central accreditation that makes it easier for the fintechs to plug into the banks and it makes it easier for consumers to be confident that who they’re sharing their data with is legitimate,” McGrath told a parliament select committee yesterday in Wellington.
New Zealand‘s big banks are making cautious progress towards open banking, but each lender needs to reach agreements with individual providers so that their customers can share data.
McGrath said accreditation and an accompanying trustmark, a logo displayed on a website that indicates authenticity and security, would smooth the process and make it easier for consumers to engage.
“That will see a far more rapid uptake of open banking than has been seen in other markets,” she said.
“In the United Kingdom, if you want to see that they’ve been accredited, which they have, it’s a complicated process and I think that’s one of the reasons why adoption by consumers hasn’t been as good.”
McGrath, who launched open banking at Barclays Bank when it was introduced in the United Kingdom in 2018, said just 14% of UK consumers are currently using it.
A digital identity for New Zealand citizens would be a further step towards boosting competition, not just in banking, she said.
“That is foundational for a whole lot of things that make competition even easier,” she said.
“That means that none of us would have to go and prove who we are every time we go and speak to professionals or other banks or telecommunication providers.” — Bloomberg
