The New Zealand Government recently announced proposed legislation for a Consumer Data Right. I’ll leave you to read the detail on that, but in short it will give consumers the right to own, manage and request the transfer of their data between interested parties. For most people this probably sounds fairly boring and irrelevant, and I may have lost your interest already. However, this announcement is part of a much bigger and fundamental change to the services we receive, and the prices we pay. More money in your pocket? Hopefully this topic is now of greater interest.
A brief history of financial services
Competition in financial services in each market around the world was mostly limited to between a few established, dominant players. New entrants in these markets were rare as the barriers to entry were very high, and new, innovative players were kept out of the market.
New Zealand’s financial services market is no different and dominated by a small number of banks. However unlike most other countries, the dominant players, ANZ, BNZ, ASB and Westpac, are all foreign owned. The major decisions for New Zealand’s leading banks are actually made across the ditch by their Australian-owned parent companies.
This market domination was not deemed a problem by Governments and Regulators, until the Global Financial Crisis of 2008 hit. Subsequent “bad behaviour” by banks around the world brought a raft of change, and in our region led to a Royal Commission of Enquiry against those Australian Bank parents. Europe and the UK had similar concerns and decided more competition was needed, so created PSD2; regulation to bring down the barriers to entry and allow for more competitors to enter the market. The changes are collectively known as Open Banking, and have started a wave of innovation, competition, and new entrants around the world.
Open Banking in New Zealand
New Zealand, for many reasons, has become one of the last countries around the world to see the benefits of Open Banking. Regulators have been slow to introduce change; banks have been slow to develop the APIs (software integration services) required for innovation, and international disruptors have prioritised other countries over expansion to New Zealand. The banking environment here is mostly unchanged, to the detriment of consumers seeking choice, digital services, and lower prices.
The New Wave
This status quo is on the verge of changing. New players such as Dosh are preparing to enter the market and offer new, digital technologies that create entirely new services for customers. Many of the ways of banking we have all become used to – using bank account numbers, waiting for payments to arrive, and accepting high merchant fees will soon be a thing of the past. Something we will look back and laugh about, like the times we stopped at an ATM to get money out for the babysitter, struggled to get mates to pay us back for tickets bought, or took large amounts of cash to collect goods from TradeMe deals.
We hope the efforts of Dosh, and other players will bring New Zealand up to speed on the Open Banking revolution, and we will all benefit from the greater competition on the market.
Dosh is launching in New Zealand in October. We’ll start to onboard our waitlist soon, so sign up to be amongst the first Kiwis to transact instantly, securely and a lot more conveniently.