"Looking Ahead - Open Banking in Aotearoa New Zealand"

"Looking Ahead - Open Banking in Aotearoa New Zealand"

With the government's intention to extend the consumer data right beyond banking, technology companies can anticipate a broader market and customer base. This expansion would allow developers to create solutions that span multiple sectors, further integrating digital services into everyday life.

The simplified partnering, as one of the strategic objectives of open banking, makes it easier for technology companies and banks to work together, leading to a more integrated financial ecosystem.

looks beyond open banking today and towards an open data future.

Development and Evolution of Open Banking in New Zealand:

  • In 2019, Payments NZ launched the API Centre, marking a significant step in open banking's development in New Zealand.
  • The Centre has developed and maintained various API standards, tools, and services and implemented a minimum open banking plan with standardized APIs for major banks.
  • Trans-Tasman open banking standards development. It emphasises “at the very least, New Zealand could join in the development committee (for Australian open banking standards) as an observer”

Definition and Purpose of Open Banking:

  • Open banking is a global movement reshaping banking and payments, providing a secure means for consumers to share banking data with third parties like fintechs through Application Programming Interfaces (APIs).
  • It focuses on consumer data and promotes greater competition and innovation, benefiting consumers, businesses, and the economy.

Strategic Objectives and Industry Commitment:

  • The early industry work on open banking in New Zealand was guided by objectives like simplification, consistency, increased market speed, enhanced services, simplified partnering, and optimal governance.
  • Payments NZ's API Centre, launched in May 2019, reflects the industry's interest and commitment to open banking.
  • "AI will impact how this transformation unfolds" As open data becomes more diverse, AI models will be able to support multiple future novel use cases. It is clear AI will play a significant role in the data economy of the future."

Vision and Service Model of the Centre:

  • The Centre's vision is to enable the industry to deliver innovative API-based services to support the financial well-being of New Zealanders.
  • Its service model is innovation-driven, market-driven, industry-led, inclusive, open, and allows for distributed delivery.

Impending Regulatory Changes:

  • A bill released in mid-2023 indicates major changes in the open banking landscape in New Zealand.
  • The Bill aims to facilitate easier sharing of individual information with trusted businesses upon explicit consent, extending potentially across the entire economy but activated for specific sectors and data types on a case-by-case basis.
  • The banking sector is expected to be the first to have this consumer data right designated by the government.


All Moving in the Right Direction:

In essence, the document outlines the significant progress in open banking in New Zealand, with a focus on consumer data sharing, innovative services, and a shift towards a more inclusive and digitally advanced financial ecosystem. The upcoming legislative changes are poised to further streamline and regulate this sector, emphasizing consumer consent and data sharing across various industries.


Regulatory Risks & Consumer Risks:

  • Like anything the interconnected nature of open banking can introduce systemic risks. - But... Efficiency, Transparency and Trust is formed through the right regulation to support innovation in this domain.
  • The reliance on technology companies, security and privacy of consumer data is contingent on the reliability of third-party service providers. If these providers do not maintain high standards of data protection and compliance, it can put consumer data at risk. - I'm glad it's taken this long to get the bill that indicates major changes completed because it shows New Zealand not just following trends, but actively participating in and influencing the development of the open banking ecosystem future.
  • People who are saying a vulnerability in one part of the system could potentially have wider implications, affecting multiple entities and compromising large volumes of consumer data. But with consumer consent being a cornerstone of open banking, technologies that manage and record user consent are becoming increasingly important and we have great New Zealand formed examples. These platforms will ensure that data sharing aligns with user preferences, security standards and legal requirements, thereby maintaining consumer trust and regulatory compliance and putting my data it in the hands of ME (and those I chose).


What's the Future?

The Bill, when passed into law, will provide consumers with a consumer data right which would allow them to request access to and consent to the sharing of their data. It will create a statutory scheme to unlock the value of data for people and their businesses.

In doing so it will:

“Help innovators in our economy create new products and services and increase competition. This in turn will benefit customers by leading to reduced prices, improved product offerings, and greater productivity. There are also opportunities to support by-Māori, for-Māori data initiatives, business-to-business applications, and improved accessibility and inclusion.”


The open banking framework is expected to stimulate innovation and competition in the financial sector. New entrants and startups will have more opportunities to offer novel financial products and services, challenging traditional banking models and potentially leading to better services and lower costs for consumers... I am my own bank!


The new Digital Identity Services Trust Framework Act in Aotearoa will come into force on 1 July 2024.

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