Some banks will be ready for open banking before May 2024

May next year is the deadline for the four major banks to be ready to implement open banking but they may be ready before that, says Payments NZ chief executive Steve Wiggins.

Wednesday, June 14th 2023, 6:12AM

Payments NZ has developed standards, known as application processing interfaces, or APIs, with its API Council, which includes representatives from across the industry, that will facilitate open banking.

Indeed, Bank of New Zealand has already gone live with the API designed to facilitate customers using third party providers for payments.

The other key API will facilitate customers authorising third party providers to access their account information.

“Some may come on before that (May). That's the end date,” Wiggins told TMM.

Setting that date was important to provide certainty for third parties wanting to develop services that take advantage of open banking, he says.

Kiwibank will follow in 2026 while the other smaller banks haven't set hard dates yet.

The APIs are crucial for ensuring all parties are using common standards.

“There have been a lot of open banking deployments around the world. The single most important thing has been the use of common standards. That's the thing that makes it work. Consistency becomes very important from an efficiency and trust point of view,” Wiggins says.

A key part of the plan is for parliament to pass legislation giving consumers rights over their own data – Wiggins says the plan is still for the current government to introduce draft legislation before the end of the current term, “which gives them another four to six weeks.”

One Australian application of open banking is that Westpac's Australian parent is offering 10 minute approvals of its digital mortgage product – open banking means it can access an applicant's data with another bank to verify income and spending details.

Wiggins says providers in the UK are offering financial management products such as budgeting services.

For example, if a customer has a power bill due but won't receive their salary until a few days later, the provider will pay the bill on the due date and give the customer a period in which to repay the provider.

Credit scoring organisations, such as Centrix, will be able to access data on behalf of lenders or landlords to verify their customers' creditworthiness.

Another application is developing a “talking bank statement” for the blind or visually impaired.

“It's really up to the imagination of the fintech or third party” as to what services may develop, Wiggins says.

Tags: banks