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New Zealand readies for era of open banking

As New Zealand prepares for an open banking regime to be implemented in the near future, the Bank of NZ (BNZ) – one of the country’s big four – says it plans to have the old way of banking exist alongside the new, while legislation catches up.

Speaking at an event in Sydney on Friday, BNZ’s head of data strategy and transformation Sonya Crosby said her bank has taken a "human-centred" design approach in its innovation, which it will apply to the open banking mandate.

Part of the technical solution is the explicit consent from, and explanation to, customers of what data is being used. “Digital engagement with the customer to say ‘this third party has actually requested this access, they want to use it for this purpose, do you agree and will you authorise this? And here’s the risks of you doing that’,” Crosby said.

“It's about literacy for customers as well. An example being instead of downloading your bank information and sending it off to your accountant, which is actually not a very safe way of transferring your information -- or screenscraping, which is even worse -- to have an application programming interface [API] in place, that is actually a really safe way of transferring information

“We’re actually reducing risk, but does the customer actually understand that, have we actually told that story, are we communicating these things in the right way?"

Mixing old with new

In readiness for open banking New Zealand launched two new standards in March this year that enable third parties to work with banks to launch new financial services for the public.

Payments NZ, a governance organisation at the heart of the country’s payment system has been running a pilot with three banks – BNZ ASB, and Westpac, as well as payment service provider (PSPs) Paymark, IT services company Datacom and auction website TradeMe to develop two standardised APIs which involve payment initiation and account information.

In May, Payments NZ opened an API Centre for paving the way to greater openness in payments and banking and “bringing to life a new API-enabled ecosystem”. BNZ has set up a sandbox for testing with dummy data and is working alongside Payments NZ to handle the governance side of the mandate.

Crosby described open banking as an example of where BNZ is merging the old and the new ways of banking together.

"We're still working in old marketing games with static rules and blanket approvals. That’s something that the maturity of the industry -- we need to get away from that and help ourselves using tech and using a different way of thinking and a different mindset of our customer to actually enable this optionality,” she said.

“Because once people have opted out, that’s it, you can’t go back to them and say -- and they might go ‘well hang on I really wanted to know about this,’ -- and if you haven't thought about given them optionality, then in a different context, you’ve lost them.”

BNZ is also inviting customers into its branches to help with the development of new offerings.

New Zealand is looking at developments in Australia, where open banking will be introduced from July 1.

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