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A New Financial Ecosystem for New Zealanders: Open Banking


FinTech Scotland member James Varga gives an outsider’s perspective on what Open Banking might mean for New Zealand.

I’ve watched with interest, albeit from a great distance, news relating to Open Banking coming out of New Zealand.  I noted only recently, Minister of Commerce and Consumer Affairs Kris Faafoi was in Canberra for discussions with his Australian counterparts on the use cases for Open Banking.

As a Canadian who lives and works in Scotland, the international angle strikes a chord with me. I’ve followed news on how Open Banking could benefit consumers coming out of many countries of the world, including the United States, Canada, Brazil, Singapore, Hong Kong, Australia, and of course, New Zealand.

Allow me to backtrack…

The ID Co.

I’m the the CEO of FinTech The ID Co. and my company has been working with bank data since 2011.  I was one of the voices that has been calling for the introduction of Open Banking for many years, and in January of this year, we realised this aim. We are one of the frontrunners in the field, and our B2B service, DirectID has over 30 customers globally, and integrates with over 5,500 banks globally – including those in New Zealand.

We are in the middle of a global storm and huge, fundamental shift in the market. Open Banking is becoming a global trend. Consumers demand that banks are much savvier with their data, and some of the digital only banks are responding to this challenge. We are at the middle of that storm and it’s exciting. Our goal is to make these trends a reality by breaking down barriers in finance, remove friction and offer speed and convenience for consumers.

I am therefore well placed to discuss the merits, or otherwise, on Open Banking.

Consumer Choice and Personalisation

Let’s start with what Open Banking can offer to consumers. Your bank holds all kind of information about you. It knows you better than anyone else. Using that bank data can be a secure and knowledgeable way to operate online. Credit applications such as a credit card, mortgage or loan can be personalised and approved in seconds. Customers can manage all their finances together, and FinTechs can offer products and services that high street banks cannot. In the UK we have such companies as Pension Bee and Wealthify doing great work here.

We have already had considerable success with our own B2B platform DIrectID, integrating with financial institutions to bring the benefits of Open Banking to their customers. Companies use DirectID to verify the identity of their customers or applicants, carry out regulatory and compliance checks such as Anti Money Laundering (AML) or Know Your Customer (KYC) and to assess affordability and spending patterns.

 Open Banking New Zealand

New Zealand is ideally placed for the introduction of Open Banking. New Zealanders can see for themselves the impact it has in the UK and in Europe (under similar legislation titled “the Second Payments Directive”). Closer to home, of course, Australia appears to be on the cusp of Open Banking, and I watch with excitement the developments made there also.

With the experience that has been garnered in these similar modern economies, lessons can be learned from challenges, and successes directly implemented.

My advice for those working in banking and finance is to embrace the technological shift that is occurring. We have found in the UK that there were banks that embraced Open Banking and those that were more reticent. While those that hesitated had very good reasons for doing so, the winners are those that have embraced Open Banking to the fullest.

The Future

What we have seen in the UK is that Open Banking is not really about banks, or FinTech’s working with banks, but about the consumer, and the benefits it can bring them. I recently wrote an article for Deloitte, in which I challenged whether consumers really needed to understand the intricacies of Open Banking. The truth is, that unless you’re particularly tech-savvy, API integrations and the like probably won’t mean too much.

What will really resonate though, is the wealth of options and bespoke options that Open Banking will provide. The benefits that I’ve listed above are just the tip of the iceberg.

As well as consumers, Open Banking can provide a wealth of services to the banks themselves. As an example, the UK’s Financial Conduct Authority, the ultimate financial regulator, has just announced new regulations around “affordability assessments”. This means all lenders must determine what an applicant’s discretionary spend is, and what the impact of offering the loan may have. Where this may in the past have meant sending in bank statements and having an underwriter spend weeks going through them, with Open Banking, this can all be done in a matter of minutes.

I’m really excited to see how and when Open Banking will be implemented in New Zealand. If you’re ready for consumer choice and Friction Free Finance, then it’s time to introduce Open Banking!

James Varga

About the author

James Varga founded The ID Co. in 2011 with a mission to create convenience—to allow us to sign up to new products and services in seconds.

The ID Co. builds products based on (open) bank data that helps businesses like online lenders to onboard their customers efficiently by solving pains such as affordability and credit risk.

The ID Co.’s DirectID product help lenders to onboard their customers by removing friction caused during the application process by the current challenges of risk, compliance, fraud, and regulation. The products provided by The ID Co. solve business pains such as assessing a customer’s affordability, verifying their account information, and thereby offsetting credit risk.

James is active in a number of local and global efforts to help people do more online, including the Fintech Delivery Panel (FDP), FDATA, Open Banking Excellence, and Trust In Digital Life (TDL), whose mission is to create a trusted ecosystem that protects the data and assets of citizens and enterprises across Europe.


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