Kiwibank customers can now access open banking-enabled payments and data sharing through internet banking and the bank's app

Kiwibank is rolling out open banking for its customers, allowing access to open-banking enabled payments and data sharing through internet banking and its app.

Open banking allows for data to be shared more easily between banks and third parties like financial technology (fintech) companies. This happens through application programming interfaces (APIs).

To connect with third parties, Kiwibank has been working with local tech company Wych. The bank has also been working with other local fintechs like Volley and Akahu to deliver open banking.

Regulated open banking began last December, with the big four banks already ready. Kiwibank was expected to have open-banking enabled payments ready by June this year, and other services available in December.

Speaking to interest.co.nz, Kiwibank chief customer officer for business Elliot Smith said the bank had brought forward both payment and data sharing aspects, and it was also going live with business accounts on Thursday, May 28.

“The other banks have still got another, I think, 12 months before they need to be live with business accounts for their standardised APIs,” Smith said.

Smith said by bringing forward their open banking plans, there’s only been a six-month window between the bank and its competitors.

“It might feel like we were slower in a sense in terms of the commitments we made but they were deliberate choices so that we could go faster."

“I’m pretty excited by the fact that we may be able to bring more forward for our customers than potentially our competitors," he said.

Smith said this was an opportunity for New Zealand to have a fairer system.

With the size Kiwibank is, Smith said they knew they wanted to work with third parties.

“We certainly aren’t in the business of building all of those ourselves and so making sure that the way we connect with our third parties and provide those open banking APIs for free to them is really important because innovation doesn’t just happen in the banks. It’s got to happen in the environment that everyone’s involved in - not just banks.”

Asked about how Kiwibank plans to retain customers, Smith said open banking unlocks more experiences for customers and you could view that as a risk or opportunity.

“Our view is that if customers get a better deal and they’re better off, and we’ve played a role in that even if we didn’t happen to provide the service, then we’ve done one of our jobs in this market which is to make banking fairer and more competitive.”

Smith said: "Ultimately, we're really excited about the opportunity for fintechs and other parties to get involved. If they connect our bank accounts to the services that they want to provide to customers, then I think that's pretty exciting for customers."

‘Businesses are often early adopters’

Smith said open banking markets in the UK and Europe show businesses are often early adopters and this was driven by “the potential for greater automation, cost efficiencies and stronger cash flow management”.

“Open banking will enable the same opportunity here in New Zealand as the ecosystem develops.”

While Smith didn’t have a figure on hand when it came to the bank's expectations of customer uptake, he said tools that helped with things like payroll, cash flow and invoices can take away friction, cost and time from small business owners.

“Open banking will enable Kiwi businesses to connect with a wider range of services and solutions over time, supporting more tailored and timely ways to manage their finances. For example, from today, Kiwibank business customers can access apps via Akahu such as PaySauce, which simplifies payroll and compliance.”

In terms of revenue, Smith said Kiwibank was firm in its perspective that third parties shouldn’t pay for the APIs the bank provides.

"We certainly didn't want to provide any barrier to third parties working with us at a cost perspective."

“In terms of value, ultimately, customers look for value in lots of different places, whether they value why we exist and the offering we bring, whether they value the cheapest rate, or they value something else," Smith said.

“We'd see it in that value exchange, which is, how do we help customers just do more, simplify things, whatever the sort of demand is on either them personally or their business."

“So simple things like dividing dinner payments among friends through the Volley app or making charitable donations to Givealittle … It just makes it simpler and easier for them, and safer.”

‘We’ll be the plumbing’

Kiwibank chief executive Steve Jurkovich has previously spoken about Thursday’s open banking launch, telling the Finance and Expenditure Select Committee the technology Kiwibank had chosen “is a far more flexible solution for fintechs joining us than it is for the Australian [bank] players.”

“We know as the smallest player, we've got to partner better. And so if we can bring other capabilities into the market, just like we do with advisors, we should do that, and customers will choose.

"I’m sure they’ll choose some great fintech solutions and we’ll be the plumbing, and customers will enjoy that, just like you’ve got multiple apps on your phone.”