Nelson Building Society becomes first non-bank ESAS member
The Reserve Bank of New Zealand (RBNZ) has admitted a non-bank institution to its Exchange Settlement Account System (ESAS) for the first time since access criteria were set three decades ago, following a review of who can use the payments infrastructure.
ESAS is one of two wholesale financial market infrastructures run by the RBNZ, and every payment between financial institutions — retail or wholesale — must clear through it before reaching its destination. Until now, access criteria had kept the system limited to registered banks, meaning non-bank entities processing payments always had to go through a bank intermediary. That exclusion had long frustrated non-bank lenders.
Per interest.co.nz, the reform followed NBDT "complaints... that access to settlement accounts gives banks a major competitive advantage," and echoed the Commerce Commission's own market study, which had "recommended widening access."
Review reshapes entry rules
The change follows completion of the RBNZ's ESAS Access Review, launched to test whether the long-standing entry rules still suited a finance sector that has evolved considerably since they were written.
Steve Gordon, Financial Market Infrastructure and Settlement (FMI&S) director, said the process had to weigh competing priorities.
"The review balanced the objectives of fostering innovation and competition with maintaining the safety, security, and integrity of the system," Gordon said in a media release.
He added that the practical effect for newly eligible entities is significant: "ESAS membership now allows approved non-bank entities to settle payments directly in risk-free central bank money without using a commercial bank as an intermediary."
Nelson Building Society first through the door
The inaugural member is Nelson Building Society, a non-bank deposit taker that has completed system testing and onboarding and is now live, with its status confirmed on the RBNZ's public ESAS member register.
The RBNZ keeps all application information confidential and does not name entities going through the process. The central bank has said it will continue updating the public register as further members are approved and has encouraged interested parties to monitor the list regularly.
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