Chris Hipkins promises Labour 'will break down the barriers that stop new competitors taking on the big banks'

Labour is promising to make the country’s banking sector more competitive if elected, with Labour leader Chris Hipkins saying he wants to create a clearer pathway for “innovative” financial providers to grow into “genuine” banking competitors, and to give New Zealanders more choice.

Making the announcement on Wednesday, Hipkins says four big banks dominate New Zealand’s banking sector. New Zealand has 26 registered banks. The banks Hipkins is referring to are Australian-owned ANZ, BNZ, Westpac NZ and ASB.

The four large Australian-owned banks are responsible for 84% of bank lending while five NZ-owned banks account for about 10% of bank lending, according to the Reserve Bank. 

“When there isn’t enough competition, customers have less choice and banks have less reason to offer them a better deal,” Hipkins says. “Labour will break down the barriers that stop new competitors taking on the big banks.”

“When banks compete harder, Kiwis get more choice and more power to shop around for a better deal,” Hipkins says.

Labour promised to:

• Introduce a new e-money licence for businesses offering services like digital wallets and payments with rules that “reflect what they do and the risks involved”
• Open up the banking system by making sure smaller providers can access essential banking and payments infrastructure on “fair” terms
• Give New Zealanders constant access to their money by requiring a secure, 24/7 real-time payments system by 2030
• Create a clearer pathway for “innovative” financial providers to grow into “genuine” banking competitors
• Make it easier for people to switch by making government-verified identity easier to use across banks and fintechs

Labour also wants to make it easier to compare insurance, with its factsheet saying: “We’ll open up insurance information too, starting with clearer, more standard terms for car and life insurance, helping people compare what they’re actually getting.”

On Kiwibank, the party says it has an important role to play in challenging the big four banks and offering New Zealanders more choice.

“Under Labour, Kiwibank will remain 100% New Zealand-owned.”

National finance spokesperson Nicola Willis has previously said Kiwibank will need capital injected into it over the medium term, but promised it would stay in Kiwi hands.

'The big four are still calling the shots'

Labour commerce and consumer affairs spokesperson Arena Williams says technology has changed what’s possible.

“You shouldn’t have to rely on one of the big banks for every financial service you use, and new providers with a better offer should have a fair chance to win your business,” Williams says.

“Labour will make it easier for new providers to get started, grow and access the systems they need to compete. If the big banks won’t provide fair access, we’ll step in.”

Williams says: “National promised to shake up banking but three years later, the big four are still calling the shots.”

“Labour will open up the system, bring in new competition and give Kiwis more power to choose.”