Open Banking is the ‘topic du jour’ in New Zealand FinTech circles, particularly with the United Kingdom (UK) initiative launching in January, and a wide-ranging Australian report recently released.
The UK and Australia initiatives are looking to empower consumers and drive competition and innovation in financial services, by opening up customer banking data to third parties looking to build new products and applications (e.g. finance dashboards, budgeting and comparison sites, financial product marketplaces, and cash flow management solutions).
It would be easy enough to follow blindly behind our Commonwealth friends as the ‘fear of missing out’ strikes – but are we actually dealing with the same issues in New Zealand? Or is Open Banking a solution looking for a problem in this part of the world?
These themes were up for debate at the recent FinTech Regulatory Roundtable video conference on the 7th of March, where full rooms in Chapman Tripp’s Auckland and Wellington offices underlined the current interest in this area across industry, government and regulators.
One theme that emerged strongly is the need to fully understand the problems we are trying to solve with Open Banking in New Zealand. Is there a lack of competition? Do we need to drive more innovation? Or are there other issues to address? Before taking action, we need to clarify these problems, along with establishing the benefits to the end customer.
Despite some reservations, there is genuine excitement among industry representatives about FinTech opportunities which could be created by giving innovative companies access to a rich pool of data, and the ability to initiate payments. However, most initiatives are still future-looking at this point, and security concerns around allowing access to account data remain an obstacle.
What was clear from the discussion is that New Zealand has some real advantages in the Open Banking space:
1. The ability to watch how things play out in the UK and Australia, and cherry pick elements that work well to implement here.
2. A proactive industry body (Payments NZ), already in the process of designing a common API framework, which could be the foundation of an industry-led approach.
3. A consumer base which is open to innovation, and has a relatively trusting relationship with banks and financial services providers.
4. Open engagement between industry, government and regulators (of which the Roundtable is a great example).
FinTechNZ will stay closely involved in the developments around Open Banking, to ensure we leverage these advantages, to create a successful version which works for the New Zealand market.
Credit: Andrew Dentice is a technology lawyer at Hudson Gavin Martin in Auckland and a member of FinTech NZ’s Core Working Group”.
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