The country's biggest banks welcomed the study. Photo: RNZ
A market study into personal banking services is now underway, the Commerce Commission says.
It comes after the government announced yesterday that it had ordered the competition regulator to look into the banking sector.
Commerce Commission chairman John Small said the study would assess potential barriers or behaviours affecting competition and quality of services.
Potential areas of focus for the study were current and deposit accounts, overdraft account services, personal loans and mortgage and credit card lending, the commission said.
Small said the commission knew "there is public interest in seeing how competition is delivering for consumers in accounts, lending, and deposit-related products and services - and whether people can switch providers easily".
The commission had been in contact with banks to begin high-level talks, he said.
Stakeholders and interested parties, including customers, would be invited to share information following the release of an initial issues paper by August, Small said.
"We also know that pretty much every household in New Zealand has a bank account and debit card, nearly 60 percent have a credit card, and the residential mortgage market accounts for $346 billion in overall lending."
A draft report would be released early next year and the full report would take about 14 months to complete.
Small said the timeframe was necessary for a comprehensive and robust study of the sector.
In response to the market study announcement, The New Zealand Banking Association said banks would engage with it, but chief executive Roger Beaumont did not think it was necessary in the first place.
"We've got nothing to hide. It's a highly regulated industry and we're used to being very transparent and open because of that degree of regulation," he said.