In a significant move towards transforming the banking sector, New Zealand’s four largest banks — ANZ, ASB, BNZ, and Westpac — are taking the next step in open banking services. Following a key deadline this Saturday, the banks are now equipped with the necessary technology for customers to securely share their banking information with third-party financial service providers. This marks the second major milestone for regulated open banking in the country, a development that promises to reshape how consumers manage their finances.
A New Era in Banking Data Sharing
The move comes after a successful rollout of open banking payment systems in May, where the banks began enabling digital connections to facilitate customer payments. This new phase, which centres on data sharing, holds the potential to make banking more transparent, efficient, and customer-friendly.
Open banking is built on the principle of allowing customers to share their financial data with trusted third parties, such as fintech firms and other financial institutions, using secure digital platforms. Unlike older methods, where customers would “screen scrape” — handing over their login credentials to allow third parties access — the open banking model ensures that customers retain control of their data at all times. By verifying identity through secure methods, customers can safely share information with providers without giving up their banking credentials.
Phil Cass, the API Centre Manager at Payments NZ, which governs New Zealand’s payment systems, described the latest milestone as a “game-changer.” The shift away from screen scraping to secure, regulated open banking practices is a critical step in ensuring customer safety and privacy.
“Through these open banking standards, the customer is always in control and never hands over the username or password,” Cass explained. “The bank will verify with the customer that they are who they say they are and that they want to share their data with a third party.”
Benefits of Open Banking for Consumers
The push towards open banking is set to bring a wealth of benefits for consumers. One of the most notable advantages is the ability to aggregate financial data from multiple banks, creating a more comprehensive view of an individual’s or a business’s financial situation. This aggregated data can then be used to offer tailored financial advice, helping customers make more informed decisions about their spending, saving, and investments.
- Faster Loan Decisions: Lenders will have quicker access to a customer’s full financial picture, which could lead to faster loan approvals.
- Improved Access to Credit: Customers who may have previously been underserved by traditional credit scoring methods will find it easier to secure loans, as their financial history can be assessed in a more holistic way.
- Personalized Financial Advice: With a complete view of a customer’s finances, providers can offer more targeted advice on managing money, reducing debt, and achieving financial goals.
The technology behind open banking also supports a more seamless user experience, with data sharing happening automatically and securely through digital connections. This development is expected to enhance customer satisfaction and increase the uptake of new financial services that rely on shared banking data.
Progress So Far and the Road Ahead
While the implementation of open banking standards is still in its early stages, the four major banks have already made significant progress. Phil Cass highlighted that the uptake of open banking has been promising, with more consumers choosing to take advantage of the new services. In fact, data on customer usage and adoption will be released early next year, offering further insights into how well the new system is performing.
Next year, the four banks plan to implement newer versions of the open banking standards, which are expected to include even more advanced features and functionalities. As more third-party providers join the open banking ecosystem, consumers will have access to an expanding range of services that make managing finances easier and more efficient.
Kiwibank, one of the major banks in New Zealand, is expected to go live with open banking standards in 2026. While this timeline lags behind the four largest banks, it demonstrates the growing momentum towards adopting open banking across the country.
Open Banking’s Impact on the Financial Landscape
The introduction of open banking standards is set to disrupt traditional banking models and inject competition into the financial services sector. By enabling customers to share their data with multiple providers, banks and other financial service companies will be forced to offer more competitive products and services. For small businesses and individuals alike, this could lead to better loan terms, more personalized financial services, and a greater variety of options.
In the long term, open banking could drive financial inclusion by enabling underserved groups to access credit and other financial services that were previously out of reach. It also promises to improve the overall efficiency of the banking system, with faster loan decisions and enhanced financial product offerings.
The move also aligns with global trends in open banking, where countries like the UK, the European Union, and Australia are leading the way in promoting more transparent and customer-centric financial systems. As the technology continues to evolve, New Zealand’s open banking initiative is poised to become a model for other nations in the region.
