Financial services providers are being urged to get ready for Open Banking in New Zealand.
The adoption of the consumer data right (CDR) that has been rolled out across Europe and Australia is moving at a slow pace and has been held back by COVID-19.
But banks have been put on notice of the impending change that will give customers a much greater say over their data.
The Ministry of Business, Innovation and Employment wants feedback on adopting CDR by October.
Michael Ewald, Director of Engineering APAC, Contino, says its good news for consumers and start-ups.
“The government’s call for feedback has set the ball rolling in creating a more collaborative and competitive financial services industry,” he said.
“As the first legislation of its kind in New Zealand, the CDR would in many ways level the playing field for incumbents and startups alike.
“If passed, the CDR would require banks to significantly overhaul their existing digital infrastructure to become compliant.”
But he says there are “key considerations for NZ banks that are seriously looking to participate in the CDR”.
He added: “For banks to succeed, they will need to focus their efforts on delivering hyper-personalised offerings and exceptional customer service to grow market share.
“Any piece of legacy infrastructure is a guaranteed threat to success in a CDR world. This means just getting started on the open banking journey is already a huge investment in itself.
“Organisations should look towards adopting cloud-native solutions that are essential to performing competitively under the CDR. This has proven to work when you look at the top six banks in Australia.
“Cross-market offerings are already emerging in Australia as its energy sector prepares for the CDR.”
He said it is a groundbreaking opportunity for the market given and incredible 135% of New Zealand’s population have mobile phone contracts with over ten petabytes of data consumed per year, which makes it “an ideal environment for customer experience innovation under the CDR.”
Commerce and Consumer Affairs Minister Kris Faafoi urged providers to adopt CDR without legislation in an open letter last December, noting the slow take-up.
There have been some initiatives in New Zealand to promote data portability, including in the banking sector, he said.
But progress has been relatively slow and these initiatives do not appear to be delivering the full positive outcomes for consumers as yet.
FinTechNZ CEO James Brown said: “Open Banking will create more trust and transparency as well as a more competitive landscape,
“As a small nation we have the opportunity to leap ahead of what the UK has achieved around open banking and could even learn from what is going on in Australia which could lead to a trans-Tasman open banking joint project.”