Commerce and Consumer Affairs Minister David Clark Photo: RNZ / Samuel Rillstone
The government has announced moves towards open banking, saying the sector will be the first to implement data sharing requirements designed to make it easier for customers to shop around.
Last year the government agreed to establish a consumer data right framework (CDR) to require companies to securely share transaction information with a competitor, with the aim of making it easier for customers to compare products and services, and switch companies.
Banks would be the first sector to implement the mechanism, Commerce and Consumer Affairs Minister David Clark said.
Open banking was a requirement on the Australian owned banks' parent companies and a fixture of the banking system in the UK, he said.
"Under open banking if somebody wanted to re-fix their mortgage at a lower interest rate, they could ask their bank to securely share transaction information, with a competitor. They could also instruct their bank to share specific data with a financial adviser of their choice- meaning more tailored and timely advice.
"The businesses and services wishing to receive this data would have to meet a number of safeguards to ensure the information could be handled safely and securely."
Green Party consumer affairs spokesperson Ricardo Menéndez March said open banking was fine but the simplest and most effective way to address record bank profits is to tax them fairly to provide relief to struggling families.
Prime Minister Jacinda Ardern this week criticised banks for posting huge profits during the cost of living crisis.
BNZ on Wednesday posted a record annual $1.4 billion profit, following on from Westpac's net profit rising 12 percent to top $1b, and ANZ posting a record-breaking $2.4b net profit.
"It was good to hear the prime minister speak so frankly about the problem of record bank profits on Monday, but the government is once again tinkering at the edges, rather than getting to the heart of the problem," Menéndez March said.
The ACT party welcomed the policy as good for banking customers but said it was taking too long.
"The government has finally had a good idea around financial policy, but it's a pity it will take two years," leader David Seymour said.
Consumer NZ chief executive Jon Duffy has said open banking came with a "lot of unknowns", and the data-sharing might more usefully be started with electricty companies and telecommunications providers, which hold less sensitive information.
"Whatever gets implemented here will need to address those security concerns if it's going to work well," he said.
Clark said the sector was a natural starting point as the the industry had already made significant progress towards open banking on their own.
"I am also aware some banks here have proactively started building the infrastructure to facilitate a CDR," David Clark said.