Māori are too often "under-served" by the financial system, in both access and relevant financial products, Reserve Bank (RBNZ) Governor Adrian Orr says.
Orr says this fact "should disappoint all New Zealanders, in part given that the Māori economy remains one of the largest potential sources of economic growth".
In a speech to the MyFiduciary Conference in Rotorua on Monday, Orr said improving Māori access to capital has been, and remains, a powerful enabler for prosperity, sustainability, cohesion, and inclusion.
"We should collectively prioritise this goal."
Orr said all New Zealanders should be able to benefit from inclusion in the financial system.
"At the Reserve Bank, we would be at a loss if we did all the hard work to promote a financial system that was strong, stable, and efficient, only for people to tell us that they are unnecessarily excluded."
He said in 2021, the World Bank estimated that around 1.25% of adults in New Zealand (circa 50,000 people) did not have a bank account. In 2022, the New Zealand Financial Markets Authority estimated that around 6% of New Zealanders had no banking products.
"As you can see, it’s hard to get precise numbers on financial exclusion, but it is significant. We are working to source data, and engage with community groups, banking staff, and customer groups, to understand the barriers to participation."
He outlined several initiatives on Maori access to capital being undertaken by the RBNZ.
He said the central bank was currently creating, with a view to publishing, a dashboard that measures progress on Māori financial inclusion across the banking system.
"What gets measured gets managed, and lessons learnt should be shared," Orr said.
"As part of our recent Financial Inclusion Thematic Review, we spoke with a significant number of deposit-taking entities to understand their internal policies and practices on inclusion, and how they measure and report progress. Lessons from this work will guide us on what banking data infrastructure and indicators are useful.
"We are also working on a pilot with some retail banks on a Māori data project, again related to the dashboard. The data pilot will include Māori data governance principles, including sharing with iwi, hapū and Māori organisations where appropriate. We are working with the Stats NZ Māori Business Definition Standard where possible – to overcome a long existing inertia to bank data collection," Orr said.
He despite the "great work" that is already happening, there is much left to be done.
"A clear signal of the task is highlighted in the recent Commerce Commission’s market study into personal banking services, and the agenda for the forthcoming Parliamentary inquiry into banking. Both have a specific focus on lending on whenua, access to bank accounts, and experiences accessing banking products and services."
The RBNZ, Orr said, will continue to highlight the importance of collaboration, and the need to focus on solutions to improve Māori access to capital.
"My hope is that bank leaders retain their commitment to this effort. I also encourage a broader group of equity providers to improve their capability to provide Māori access to capital. We have yet to see the collaboration and investment scale that will unleash New Zealand’s full economic potential."
Orr highlighted that economic researcher BERL’s most recent report on the Māori economy calculated that it grew at nearly twice the rate of the total economy over the 2013-2018 period. The Māori population is also young and will make up a significant proportion of the labour force in the coming years – circa 20% cent by 2040. Meanwhile, Māori land titles make up approximately 5% of the total land area in Aotearoa, but around 80% of this land is deemed as being underused. And, at present, only 8% of New Zealand businesses are deemed to have Māori owners, despite being circa 17% of the total population.
"At Te Pūtea Matua, in 2022 we released our Māori Access to Capital Issues Paper. In making that report, we interviewed 42 capital seekers from a cross-section of the Māori economy and financial sector. They all shared similar experiences.
"The key themes raised from the discussions were a shortage of data on Māori businesses, the complexity and opaqueness of the funding landscape, difficulties lending on Māori land, and a lack of leadership across the ecosystem to address access barriers.
"From the financial sector engagements, it was clear that there was a lack of understanding of Māori business values and models. There was also a general agreement that New Zealand’s capital market falls well short of meeting the capital needs of Māori business," Orr said.
Other work under way by the RBNZ is work with the Council of Financial Regulators to identify and address any barriers to accessing banking services from two perspectives:
"From a service delivery lens, we have a research project with a third party on what an inclusive process of opening a bank account looks like, and what are the best practices. There is a strand looking specifically at issues for Māori Trusts, Rangatahi (youth) Māori, and Māori businesses.
"From a product lens, we are collaborating with the Council of Financial Regulators to look at the concept of a basic bank account, with fewer features but is easier to open and manage."
Orr said the findings from this work will be public later this year "and should have flow on impacts for Māori access to capital".
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