Just last month, the government in New Zealand issued an RFI – request for information – to potentially obtain open banking and related technologies. While this might seem like a small thing, it is in fact a hugely significant milestone in New Zealand fintech, and could spell an entirely new era for residents. But what exactly is open banking, and what could it mean for New Zealanders?
Open Banking: Explained
Open banking is a financial framework that allows banks and financial institutions to effectively share customer data with third-party providers, using application programming interfaces to ensure security. This system gives consumers more control over their financial information, enabling them to access new and innovative financial services without compromising their safety or privacy.
For New Zealand residents, this could mean seamless access to budgeting tools, personalised loan offers, or real-time financial insights – all without the hassle of manually inputting their banking details every time they use a new service. Across the world, open banking has already been implemented by numerous countries, including the UK, Australia, and India. By initiating it now, New Zealand is working to compete on a global scale, positioning itself as a certified leader in the fintech landscape.
What Does this Mean for New Zealand Businesses?
Before exploring what open banking means for residents, it’s first important to note why this is an important move for New Zealand businesses – specifically, businesses that operate solely online. Looking at the New Zealand iGaming scene, for instance, one of the things holding it back has been limitations in payment processing and the doubtless friction associated with transactions.
For residents playing pokies or engaging in any other online gambling activity, slow transaction speeds, high fees, and security concerns are consistent pain points, which have subsequently restricted the industry from flourishing in the New Zealand market. With open banking, however, these barriers could be significantly reduced, allowing for instant deposits and withdrawals directly from bank accounts – which will potentially lower transaction fees, offer faster transitions, and increase engagement. For other online businesses, the same could also be true, as open banking provides seamless payments across the board, without having to rely on a third-party processor.
What Does this Mean for New Zealand Residents?
As a result of all this, New Zealand residents stand to gain a lot more control and flexibility over their financial lives. With open banking, they will be able to securely share their financial data with trusted third-party providers, enabling access to a wider range of services that are tailored to their individual needs. Whether it’s accessing automated trading tools, obtaining customised loans, or receiving more tailored financial insights, open banking will make managing finances far easier and more efficient than ever before.
As we just mentioned, there’s also the added bonus of reduced translation fees and faster payments. Whether it’s an online casino or any e-commerce platform, users will finally be able to enjoy instant deposits and withdrawals, bypassing the delays and costs that they’ve so far been accustomed to.
It’s also worth noting that open banking introduces a level of financial transparency, improving the security of transactions and giving residents greater confidence in how their financial data is shared and stored. Not only this, but it also strengthens consumer protection, adhering to strict security standards and regulations complete with encryption and multi-layered authentication – another important point considering the amount of hacked passwords over the last few years. With consent-based data sharing being more important than ever – in 2024, the Ministry for Business, Innovation and Employment reported that nearly $200 million was lost to scams and cybercrimes in New Zealand – open banking could be the key to reducing those numbers and ensuring residents not only have control over their data, but as a result, their safety.