Payments NZ, the bank-owned company that governs New Zealand’s core payment systems, has unveiled dates by when several of its shareholders must be technically and operationally ready to allow their customers to share financial data with third parties.
This comes as Payments NZ publishes its minimum open banking implementation plan. This features requirements and timelines for ANZ, ASB, BNZ, Westpac and Kiwibank to have standardised Application Programming Interfaces (APIs) ready for use by third parties. The five banks represent more than 90% of NZ consumer banking accounts.
Open banking requires banks to share product and customer data with customers and third parties, with the consent of the customer. The idea is that such data sharing should both increase price transparency, and enable comparison services to accurately assess how much a product would cost a consumer based on their behaviour. This could therefore enable the recommendation of the most appropriate products for individual customers.
ANZ, ASB, BNZ, and Westpac must be ready by May 2024 for what's known as the v2.1 Payment Initiation API standard, with the v2.1 Account Information API standard to follow by November 2024. BNZ is already live with the v2.1 Payment Initiation standard. Kiwibank is to be live with both standards by May and November 2026.
Payments NZ says the two v2.1 API standards allow a customer to set up and make electronic payments (payment initiation) and share their banking data (account information) with third party businesses of their choice, with their consent. Payments initiation is available only for transaction accounts. Account information is available for transactional, credit cards, savings, and lending accounts.
APIs work as a secure channel, allowing two different systems, such as a bank and a fintech, to communicate with each other and share information.
Last November Labour's then-Commerce and Consumer Affairs David Clark announced a move towards open banking, saying this would ensure banks must share customer information if they request it, making it easier for New Zealanders to compare mortgage rates, apply for loans and switch banks. But Clark said then that actual implementation of open banking was still two years away.
Clark noted open banking is already required of the Australian parents of NZ's big four banks, and "is a fixture" of the banking system in the United Kingdom being "a common place tool used overseas to increase competition and make it easier for customers to get better deals."
Payments NZ was formed in 2010 by the banking industry with support of the Reserve Bank. It governs NZ’s core payment systems and works with the industry to lead the future direction of payments in NZ. Payments NZ's shareholders/owners are ANZ, Westpac, BNZ, ASB, Kiwibank, TSB, HSBC and Citibank.
While limited open banking is already happening in NZ, Payments NZ says the timeline draws a line in the sand for broad market adoption and coverage.
“Open banking is a powerful tool for enabling economic prosperity and financial wellbeing for consumers in Aotearoa. It enables consumers to have more choice in who they want to share their financial data with and how they want to make payments," says Wiggins.
“It encourages greater competition and customer innovation by allowing consumers to access a wider range of products and services from different providers. Over time, more new players will join the ecosystem and I look forward to seeing innovation thrive as a result.”
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