More than one million New Zealanders use unregulated open banking services each year. Photo: 123RF
Open banking service providers will need to migrate more than one million users to the safer, government regulated system.
Last week, the four largest banks met the deadline to allow for customers to securely share banking information with financial services.
It was the second major milestone for regulated open banking after banks began supporting payments via digital connections - called APIs - with third parties in May.
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The founder of open banking infrastructure business Akahu Josh Daniell said more than one million New Zealanders used unregulated open banking services every year.
The next step was moving those existing users to the regulated system, he said.
"All of the third parties that are currently supporting some form of unregulated open banking product will be looking for ways to migrate across to these new APIs, and the prerequisites are really that the APIs deliver everything required for the use case and that the APIs are available on reasonable terms.
"So, both of those prerequisites need to be met before any use case can migrate across them."
Akahu would be able to move 75 percent of its customers to the new system by the end of 2025, Daniell said.
The new regulation should make for a smooth transition and make open banking in New Zealand more successful than it has been overseas, he added.
"When the open banking regulation rolled out in the UK and Australia, there have been a number of fishhooks with that regulation that made it difficult for existing unregulated open banking activity to migrate across.
"In New Zealand, we think that the regulators have done a really good job with our regulation through the Customer Product Data Bill and those fishhooks have been removed.
"So, we're expecting in New Zealand that there'll be much faster migration of all the current market activity across to the regulatory environment, which would be great and we should get a big uptake in the first couple of years."
The remaining 25 percent of Akahu's activity would be able to transition when all banks began delivering open banking connections and all products were supported, Daniell said.
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