Government moves to introduce open banking

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Forums › Finance and wealth management › Government moves to introduce open banking

freitasm

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#302250 10-Nov-2022 10:28

Press release:

The Government has announced moves to increase bank competition and deliver a better deal for New Zealanders with the introduction of open banking, Minister of Commerce and Consumer Affairs David Clark announced today.

Last July, the Government agreed to establish a consumer data right framework (CDR) which would require data holders like banks to ensure New Zealanders can gain access to a wider range of products and services that better meet their needs. Today the Government is announcing banks will be the first sector to implement the mechanism.

“Open banking ensures 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,” David Clark said.

“Open banking is a requirement on the Australian owned banks’ parent companies across the ditch and is a fixture of the banking system in the UK. It’s a common place tool used overseas to increase competition and make it easier for customers to get better deals.

“Under open banking if somebody wanted to re-fix their mortgage at a lower interest rate, they could ask their bank to securely share transaction information, with a competitor. They could also instruct their bank to share specific data with a financial adviser of their choice– meaning more tailored and timely advice.

“The businesses and services wishing to receive this data would have to meet a number of safeguards to ensure the information could be handled safely and securely.

“The key point is that open banking allows customers to shop around for better deals. That means banks will also have to work harder to retain their customers, leading to savings for consumers.

“At a moment in time where cost of living is high around the world, consumers should have the power to shop around for better deals, and make sure they’re getting the best bang for buck out of their investments.

“The Prime Minister has urged banks that are reporting record profits to do what’s right for their customers and help them out in challenging times. Open banking is an additional tool to promote competition and ensure consumers are getting a fair deal.

“The banking sector is a natural starting point for rolling out consumer data rights, as the industry has already made significant progress towards open banking on their own. Banking was also the first sector designated in Australia so we can learn from them.

“I am also aware some banks here have proactively started building the infrastructure to facilitate a CDR,” David Clark said.

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Mad Scientist
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#2994296 10-Nov-2022 10:33

EXCELLENT!

wellygary

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#2994299 10-Nov-2022 10:37

Don't expect anything tomorrow thou,

https://www.nzherald.co.nz/nz/politics/government-to-make-it-easier-to-switch-banks-forcing-banks-to-share-consumer-data-on-request/6C5BV2XSYV5BTSM3PIURHE7Y3A/

"Customers wanting immediate better deals may be left wanting however. The Government thinks it will take up to two years to implement."

-Betcha nothing happens before 2025...

GV27

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#2994308 10-Nov-2022 10:52

So is that two years from some sort of formal notice or schedule or is two years from today?

wellygary

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#2994320 10-Nov-2022 11:29

GV27:

So is that two years from some sort of formal notice or schedule or is two years from today?

They have to draft and pass legislation to enable it, that takes time, then there is the implementation, so its all "how long is a piece of string"

sen8or

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#2994324 10-Nov-2022 11:39

I fail to see how this will make a significant difference.

Its not like its hard to switch banks or shop around now, sure, it can require that a consumer has access to transactional information but with virtually everyone on internet banking, access to this sort of information is already at our fingertips and is required as part of normal lending criteria now anyway.

Or is this playing to Labours fan base that wants everything handed to them on a platter so that they don't actually have to think and act for themselves.........

freitasm

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#2994328 10-Nov-2022 11:51

It is not only about changing banks but about creating new services.

And please leave political discussions to the Politics sub-forum.

kobiak

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#2994330 10-Nov-2022 11:54

sen8or:

I fail to see how this will make a significant difference.

Its not like its hard to switch banks or shop around now, sure, it can require that a consumer has access to transactional information but with virtually everyone on internet banking, access to this sort of information is already at our fingertips and is required as part of normal lending criteria now anyway.

Or is this playing to Labours fan base that wants everything handed to them on a platter so that they don't actually have to think and act for themselves.........

dont know if I paid any bank fees apart from send/receive international wire transfer in the past ˜10yrs? is there any (i'm sure there's $5-10 card release fee)?

and interest fees are usually the same across major banks anyway. So I fail to understand what cost/fees reductions will be passed back to the customer.

However, open banking opens endless opportunity to access data :D

helping others at evgenyk.nz

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SATTV

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#2994341 10-Nov-2022 12:02

sen8or:

I fail to see how this will make a significant difference.

Its not like its hard to switch banks or shop around now, sure, it can require that a consumer has access to transactional information but with virtually everyone on internet banking, access to this sort of information is already at our fingertips and is required as part of normal lending criteria now anyway.

Or is this playing to Labours fan base that wants everything handed to them on a platter so that they don't actually have to think and act for themselves.........

Moving banks is easy unless you have a mortgage as the bank holding the mortgage expects you to have your day to day banking with them.

From what I understand if you find a better deal you will be able to transfer your mortgage rather than discharging your existing mortgage and getting a new one with the new bank, you still will have to engage a lawyer I suspect but should not be as bigger nightmare as it is now.

John

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ben28

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#2994342 10-Nov-2022 12:02

Have you not seen the number of issues on this site where people struggle to switch cellphone or internet providers.

Switching banks is many orders of magnitude more difficult. Even I'm tech savvy and have worked for a Bank and I would struggle to switch banks . credit cards, kiwisaver, share trading , AP's set up years ago, Direct Credits only made annually or not at all if a company stops paying dividends for a few years!.... the list goes on and on .

The average person would not be able to switch banks.

The vast majority would find it so hard , that even if they could, they would only do it if they really needed to.

On a different note - Profits - Someone said the competition would mean that Bank profits would be 10% less. Well, that will just wipe out next year's profit increase, and subsequent years' profits will continue to be double-digit (no matter what the state of the economy). So, I don't view open banking as being the magic fix that everyone expects.

However quite a few in IT will make real good money in the multiyear project with an end date that can't move, and functionality can't be dropped, so more money will have to be thrown at IT to meet the project objectives!

johno1234

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#2994347 10-Nov-2022 12:26

ben28:

Have you not seen the number of issues on this site where people struggle to switch cellphone or internet providers.

Switching banks is many orders of magnitude more difficult. Even I'm tech savvy and have worked for a Bank and I would struggle to switch banks . credit cards, kiwisaver, share trading , AP's set up years ago, Direct Credits only made annually or not at all if a company stops paying dividends for a few years!.... the list goes on and on .

The average person would not be able to switch banks.

The vast majority would find it so hard , that even if they could, they would only do it if they really needed to.

On a different note - Profits - Someone said the competition would mean that Bank profits would be 10% less. Well, that will just wipe out next year's profit increase, and subsequent years' profits will continue to be double-digit (no matter what the state of the economy). So, I don't view open banking as being the magic fix that everyone expects.

However quite a few in IT will make real good money in the multiyear project with an end date that can't move, and functionality can't be dropped, so more money will have to be thrown at IT to meet the project objectives!

Yep. Bank account portability like cellphone numbers? For a start there's no globally consistent and unique ID for bank accounts. All our accounts are made of Bank and Branch. It didn't matter that 021 was a Vodafone number moving to Spark because the internal unique ID of the SIM is not tied to a network company. Our bank accounts don't have an internal unique ID like this that is portable. So the entire guts of all the banks would need redesign.

I can't see this getting off the ground in the way cellphone numbers have portability. Ever.

surfisup1000

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#2994349 10-Nov-2022 12:37

Our banking system is sooo slow to change. We're still using the same basic account structure and overnight batch processing for 40 odd years now (probably more, I am too young to know). Although, they do run batches several times in the day now . But, hardly a big change.

wellygary

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#2994360 10-Nov-2022 13:28

surfisup1000:

Our banking system is sooo slow to change. We're still using the same basic account structure and overnight batch processing for 40 odd years now (probably more, I am too young to know). Although, they do run batches several times in the day now . But, hardly a big change.

yip, we are still only M-F, although that goes everyday from April 2023....

https://www.paymentsnz.co.nz/resources/articles/payments-moving-365-days-year/

gzt

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#2994367 10-Nov-2022 14:07

Australia already has this. Mainly Australian banks in NZ with no real excuse for those banks to drag feet on this.

hamish225

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#2994386 10-Nov-2022 14:36

In the UK, i changed banks and all my automatic payments automatically transferred over to my new account number, with no action needed on my part. Though it makes sense to change things over to the new account number if you can obviously.

For reference if anyone is interested in the process there: https://www.currentaccountswitch.co.uk/

The other thing I'd like to see brought in here is IBAN numbers. It would make paying people in other countries so much easier.

*Insert big spe*dtest result here*

mattwnz

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#2994388 10-Nov-2022 14:40

I am surprised that more people don't have already have accounts with multiple banks. Especially if you have savings, so you spread the risk as well as shop around for the best rates. You can still have a main bank that you do most of your transactions through. It also provides some redundancy in case a banks systems are down and you need to make payment.

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