The Government has announced it will introduce open banking as a way to increase competition so Kiwis can get a better deal.
Open banking requires banks to share customer information on request, meaning New Zealanders can easily compare mortgage rates, apply for loans and switch banks.
Minister of Commerce and Consumer Affairs David Clark says 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".
It comes at a time where banks have reported record profits while most Kiwis are feeling the cost-of-living sting.
Now, the banking sector will be the first to adopt the consumer data right framework (CDR) established in July 2021, designed to allow consumers greater access to a wider range of products and services.
"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," Clark said.
"Open banking is an additional tool to promote competition and ensure consumers are getting a fair deal."
Clark said even without the regulations, there's "nothing to stop [banks] from operating in a more competitive way now."
"I think they need to look at themselves.
"The taxpayer does look after banks when times are tough, now the shoes on the other foot - taxpayers are doing it a bit tough, the banks are actually pretty flush at the moment."
Open banking is a measure that's already been adopted in many places overseas, including Australia and the United Kingdom.
Speaking to Breakfast this morning, open finance platform Akahu's co-founder Josh Daniell said the move gives consumers more control over their banking.
"There's no obligation to connect your accounts to any other product, but if you see value in doing so, that's when you can make that decision."
When it comes to any kind of data-sharing, there will always security concerns, Daniell said.
"This incoming regulation... that will set some minimum standards for what is expected in terms of securing that data."
Clark confirmed today that there will be "clear rules, law" in place to protect sensitive information.
"By working through this carefully, how the security's gonna work, how the systems and processes interfaces are going to work, it will be very clear by the time that open bank is launched with the secure systems in place to banks exactly how it functions."
It's expected that work to implement open banking will take up to two years to introduce, the Government says.
Other financial services, telecommunications, insurance, energy, and health may all be considered for CDR designation in the future.
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