After years of anticipation and frustration over slow progress, New Zealand’s open banking era is about to become a reality. 

On December 1, official regulations come into effect, bringing sweeping change to how Kiwis access and control their financial data. Akahu co-founder Josh Daniell, whose platform already integrates with more than 85 products that draw on consumers’ bank data thanks to voluntary agreements in place, joined the Business of Tech podcast to unpack what the new regime will mean for consumers, fintechs, and the banking giants themselves.​

Daniell explained the significance of the shift underway: “Over the last 20 years, there has been a buildup of consumer demand for this type of connectivity to a point where there’s more than a million Kiwis each year in New Zealand using unregulated, open banking methods,” he told me.

The old model was a messy patchwork – screen-scraping bots, voluntary deals, and inconsistent application programming interfaces (APIs) that left customers with little transparency or control. 

“Consumers didn’t have full control of how those connections worked,” Daniell said, “and any product that wants those kind of data feeds, either has to go and get a contract with each bank, or do it in a way that isn’t sanctioned by the bank”.​

Encouraging the mavericks

Under the new regulatory system, a product provider or intermediary like Akahu can become accredited and access secure, standardised APIs from any major bank, a move Daniell believes will “put the consumer more in the driving seat” and sweep away the old system’s uncertainty. 

This reform is not just about convenience. It is intended to foster greater competition and innovation. 

“If there was a challenger in the banking sector…they can make it simple for people to connect their external accounts and then switch across to those better products,” Daniell explained. 

The Commerce Commission’s recent market study recommended open banking precisely for this reason – to unlock bottlenecks and foster a more vibrant sector.​

But New Zealand’s adoption of an official open banking regime is well behind other countries, such as Australia and the United Kingdom, where uptake of open banking services has been limited. Daniell is upbeat about the New Zealand system’s design. 

Lessons from the Aussies and Brits

“We think MBIE really learned from those regimes that have gone in front of us, and we think the regulation is well designed. It’s simple, it sets out a data sharing system, and it doesn’t try to move into things like data protection, which is left to the Privacy Act,” he said.

He argues New Zealand’s system is more streamlined than Australia’s, which “over-engineered some aspects…and as a result, some organisations haven’t actually transitioned”.​

On launch day, the Big Four banks, ANZ, ASB, BNZ, and Westpac, will be designated as official data holders, required to offer open banking APIs to any accredited party. “It turns it from a voluntary offering…to a mandatory offering,” Daniell said, “and it also means that you don’t need a contract with each bank. You become accredited centrally, and then you have access to all regulated APIs in that system”.​

Payment innovation is another headline benefit. Daniell points to future use cases, such as convenient bank-to-bank payments, app-to-app transactions, and avoiding credit card fees.

“With open banking, you can essentially put your bank account on file, like putting a card on file, so you can have exactly the same experience. You leave the Uber, and you’re paying via a bank payment rather than a card payment. And the benefit here is a cost one. It’s just cheaper to process an account-to-account payment than it is to process that same payment over the card network”.

Trust and value will rule​

Concerns about privacy and security remain, but Daniell is clear that trust and value will always be central for consumers. 

“People absolutely need to consider the party that they’re dealing with and decide whether they trust them with sensitive data. Regulated open banking doesn’t change the decision they need to make there,” he says. Accredited companies face strict requirements – insurance, fit and proper tests, and security obligations – but consumers must weigh “how much value they’re going to get from sharing their data”.​

Looking ahead, Daniell is bullish about rapid adoption as the voluntary phase ends: “I would like to think that we have hundreds of thousands of Kiwis using the regulated open banking system before the end of next year…within three years, I’ll be disappointed if we don’t have a million Kiwis having used it. I think that’s viable, given all of the unregulated use of open banking that currently exists”.​

Listen to the full conversation with Josh Daniell in the latest episode of The Business of Tech podcast, streaming on iHeartRadio and wherever you get your podcasts.

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