Banks accused of delaying tactics, hindering fintechs
Major banks are rolling out their own open banking services but are “playing a delaying game, hindering independent fintechs and locking in their market power,” according to the Commerce Commission’s latest open banking progress report.
“We are concerned that, while providing an uptick in innovation, this trend will not deliver any material enhancement of competition because the major banks would remain in control,” the commission said.
The report highlights that only “a handful” of payment and banking services are currently in the market, many of which are “suboptimal” because they use less secure methods than open banking, and the Commission wants these services to adopt open banking’s more secure methods “as soon as possible,” interest.co.nz reported.
A recent parliamentary report also warns that, despite new recommendations, major banks’ dominance is likely to persist and that even well-intentioned reforms may end up reinforcing the status quo.
Control over key services and BNZ criticism
The commission notes that banks “have cemented control” of GetVerified, New Zealand’s provider of Confirmation of Payee Services.
“We consider Confirmation of Payee a utility service that should be available to all users in a timely manner,” the report said.
In April, the commission met with each major bank CEO “to seek better conduct on progressing open banking.” While most major banks have improved, the commission said, “we are concerned that BNZ has not met our expectations on this issue.”
“This is disappointing, we consider BNZ have been the leading bank on progressing open banking as a whole,” the report said.
Unlike other majors, BNZ has not yet partnered with entities who would continue to use less secure methods where open banking support is not yet available.
BNZ: Security is paramount
A BNZ spokesman emphasised that customer safety is the bank’s top priority, especially as fraud and scams become more prevalent.
“The safety and security of our customers’ information is paramount, and in an environment where fraud and scams are increasingly prevalent, we believe if open banking is to succeed, customers need to be able to trust their data is safe. Without trust, open banking will fail,” he said.
“That’s why we are committed to the highest safety standards and to ensuring that customer data is protected. In line with these commitments, we remain unwilling to partner with entities who won’t commit to stopping the use of unsecure methods to access BNZ’s customer data. We think our customers would expect nothing less of us.”
BNZ welcomed the Commerce Commission’s stance on data security, adding, “We are pleased to see the Commerce Commission acknowledge that suboptimal access is not in the long-term interest of consumers as it requires consumers to share their bank login credentials.
“We are also pleased the Commerce Commission has agreed with BNZ’s position that entities using suboptimal methods must make it clear to consumers, so they understand the risks and liabilities.”
Regulatory deadlines and competitive disadvantage
The commission warns that “bank-owned products will have ready access to other payments channels, placing fintechs at a competitive disadvantage.”
For example, BNZ’s Payap has access to Visa, Mastercard, and open banking, giving it “near-ubiquitous coverage of New Zealand consumers, which purely open banking fintechs will not have in the short to medium term.”
The commission is proposing a 2027 deadline for smaller banks to deploy APIs, while the big four will be regulated from Dec. 1 this year and Kiwibank by June 1, 2026, interest.co.nz reported.
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