Imagine a world where securing the best mortgage deal tailored to your financial history is as easy as a few taps on your phone. Or envision an app that not only helps you track your daily expenses but also intelligently recommends investment opportunities based on your savings.

Words by Dan Huggins, Managing Director and Chief Executive Officer, BNZ.

This is not a distant dream; it’s the future New Zealand is stepping into with open banking. So, what is open banking? At its heart, it’s a system that empowers New Zealanders to take charge of their financial data. It enables Kiwis to give consent to their banks to securely share their financial information with other trusted providers. This will enable financial service providers to create more personalised products and services, fuelling innovation and competition which will ultimately benefit consumers.

At BNZ, we’ve been a pioneer in this space, providing a range of open banking services since 2018. However, to realise the true potential of open banking, it’s crucial for all banks to be on board. Significant strides have been made recently. By mid-2024, all major banks in New Zealand are required to go live with Payments NZ’s open banking standards, something that BNZ has already implemented. Alongside this, the Ministry of Business, Innovation and Employment has recently completed consultation on a draft law to establish a Consumer Data Right (CDR) in New Zealand. Once in place, this legislation will give individuals and businesses greater choice and control over their data. 

The benefits of this will be significant, both in terms of innovation and competition. For individuals, a practical implementation of open banking could be a budgeting app that aggregates all your financial accounts in one place. Imagine an app that not only tracks your spending across different bank accounts and credit cards, but also analyses your expenses to help improve your financial wellbeing. 

Businesses, particularly small and medium-sized enterprises, could benefit from open banking through enhanced cash flow management tools. A local shop, for instance, could use an open banking service to automatically match incoming payments with invoices, giving them a real-time view of their financial health. This sort of tool would streamline operations, allowing for more time spent serving customers and less on admin. 

Open banking also improves security and privacy – key concerns in our digital age. By the middle of this year, the major banks will have adopted Payments NZ API standards, with some smaller banks joining by 2026. This unified approach across the banking sector ensures secure and standardised data sharing. It’s a significant step in mitigating risks associated with less secure data-sharing methods, like screen scraping, used by some FinTech firms. 

Ultimately, the move to open banking is set to make banking smarter, more in tune with what you need, and safer too. It’s a big step forward, making sure the way we handle our money is keeping up with the times, and truly works for everyone in New Zealand.