• The Commerce Commission’s first study into NZ’s personal banking sector uncovers a two-tier market lacking competition and innovation, dominated by four major banks focused on maintaining profit margins.
  • Recommendations include fostering market entry for new players, open banking by mid-2026, and enhancing consumer choices, aiming to disrupt the current oligopoly and improve consumer outcomes.
  • Consultation on the draft report is open, with final recommendations expected in August 2024, targeting systemic changes for a competitive and innovative banking landscape.

A major investigation into New Zealand’s personal banking by the Commerce Commission has found that the big banks are not competing enough, which is bad for customers.

The study showed that the big four banks – ANZ, ASB, BNZ, and Westpac – are making lots of profit but aren’t innovating or investing in technology as they should.

This situation has created a market where there’s little real competition, and customers are missing out on better services and products.

What’s Being Done:

The report suggests several big ideas to shake things up:

  • Help smaller banks and new players compete better by making it easier for them to get the money they need to grow.
  • Speed up the introduction of open banking by 2026 to allow new tech companies to bring innovative services that could challenge the big banks.
  • Make sure banking rules and regulations encourage competition, not hinder it.
  • Give people better tools and information to make it easier for them to switch banks and find the best deals.

The aim is to break the current hold the big banks have on the market, leading to more innovation and better choices for customers.

Why It Matters:

The lack of competition in New Zealand’s banking sector isn’t just about money; it’s a social issue, affecting particularly those in less advantaged positions. People in rural areas or those with less financial literacy, for example, often don’t have the same access to banking services, widening the financial inclusivity gap. This calls for a banking sector that is more accessible and beneficial to all New Zealanders, ensuring fair and comprehensive access to financial services.

Next Steps:

The Commerce Commission is asking for feedback on its suggestions until April 18, with a final plan set to come out in August 2024. They’re looking to make lasting changes that will make banking better and fairer for everyone in New Zealand.

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