Akahu update

People are often surprised by what’s going on in open banking in New Zealand already, and the functionality that is available.

Here's a quick overview on what's happening in Akahu-land.

API customers

We provide open banking API services to a broad range of government, corporate, and fintech organisations.

56 organisations are currently accredited to use Akahu’s API in production environments with Kiwi consumers. The five most common use cases that we support are:

• Accounting and tax solutions
• Personal financial management tools
• Identity and bank account verification
• Funding online accounts
• Loan applications

We also support over 350 “personal apps”, which are used by individuals or businesses that access our API for programmatic connectivity with their own bank accounts.

Activity

Here are some numbers regarding Akahu connections and traffic.

Daily API requests: Over 1m

Daily API requests in relation to Kiwi consumers that have chosen to initiate payments or share their data with third party services

Deposits: Over 1b

Value of deposit account balances currently connected to third party services via Akahu

Loans: Over 2.5b

Value of loan account balances currently connected to third party services via Akahu

Payments initiated via Akahu: +171%

Growth rate in the dollar amount of payments initiated over the 12 months to 30 September 2024

Consumers granting one-off access: +529%

Growth rate in consumers granting one-off data access to a third party service during September 2024 versus September 2023 (this increase in activity is mostly related to our increased focus on providing solutions for the lending sector)

Active Akahu consumers: +74%

Growth rate in consumers with an active data or payment consent over the 12 months to 30 September 2024

Genie: transaction enrichment

We’ve always considered transaction enrichment to be a fundamental component of our role as an open finance intermediary, and we provide out-of-the-box data enrichment for accounts connected via Akahu.

However we’ve also seen an increased demand for pure transaction enrichment - without a consumer connecting their accounts.

Our Genie API enables an organisation to send a raw transaction description or payee account number, and get back the merchant’s trading name, category, description, logo, location, website, NZBN, and more. You can try this out yourself at https://demo.genie.akahu.nz/

This extra data can give consumers better context and information about their spend, leading to reduced support queries for unrecognised transactions, and reduced refund requests.

Akahu Apply: lending solutions

Akahu has historically offered a range of API services for developers. But in the lending sector, we recognise that many organisations would prefer to get up and running fast without any technical integrations.

So we built Akahu Apply, a web interface for loan applicants, lenders, and brokers.

Akahu Apply enables a user to connect accounts using an open banking flow, or upload PDF bank statements.?

The data is then aggregated and processed through a transaction enrichment pipeline. We classify income, detect transfers, surface alerts, and categorise spending. The output is a high quality dataset and interactive HTML report to make decisioning fast and accurate.

Akahu Apply is used by lenders and brokers to significantly reduce the human time spent collating data and assessing loan applications, saving up to 5 hours per application. (And loan applicants love the simplified process too.)

Incoming regulation

Like many of you, we’ve been eager to engage with policy makers as the Customer and Product Data Bill and associated regulations are developed. This regulation is often referred to as “Consumer Data Rights” or “CDR”. It will become New Zealand’s regulated open banking environment.

The Bill is expected to be enacted in early 2025, and may become active through secondary regulation before the end of 2025. This is a critical period as the initial CDR settings are defined.

Generally, we think that the Bill has been well-designed (you can read our submissions here). We expect that this regulated form of open banking in New Zealand will get much faster consumer adoption than similar regimes in the UK and Australia. And we intend to support that uptake by being a major (and early) user of the CDR regime.

Pre-open banking regulation

The four largest banks have committed to delivering specific versions of open banking APIs during 2024 and 2025.?

These API versions have limitations, which we’ve discussed elsewhere. They’re also subject to a bilateral agreement with each bank, which governs the use cases that each bank will permit, the fees they set for using the APIs, liability allocation, and other matters.

So there will be a period over the next 1-2 years where access to purpose-built APIs (for the four largest banks) is possible, but subject to bank control over the functionality available and terms of access. Once the CDR regime is active, these same APIs will be available via CDR, and any bilateral contracts will fall away.

We’ve shared our ability to migrate Akahu traffic to these purpose-built APIs over time with each of the four largest banks, and are confident that a material portion of our traffic will be able to migrate by the end of 2025 (provided that APIs are delivered as promised, and that bilateral terms are viable).

All going well, we expect 75% of Akahu traffic to route to purpose-built APIs by the end of 2025 (for the four largest banks).

A note of gratitude

We made Akahu available to third parties at the beginning of 2021. At that time, we thought that open banking regulation was imminent (??), and that we would be slightly ahead of the curve.

As it turned out, regulation has taken longer than expected, so third party services that use unregulated forms of open banking have been operating in a less certain environment over that time.

We owe much to the early pioneers of open banking in New Zealand, such as Xero and PocketSmith, who showed that Kiwi consumers can get real value from sharing their bank data with third party services.?

We owe much to our early customers, such as Cloudcheck, Simplicity, and PaySauce, who took the plunge and built open banking-enabled functionality ahead of the curve, and trusted us to provide the connectivity.

And we owe much to the Kiwi consumers who have used these services. We recognise that you place serious trust in Akahu and these services to act in accordance with your instructions, and to deliver the promised value. Thank you for voting with your feet and demonstrating the demand that has helped to make open banking a permanent part of the landscape.

Finally, thanks to the Akahu team. We couldn’t have done this without your technical brilliance, strong ethics, perseverance, and care for the consumer experience. ??