New Zealand was a fintech leader back before fintech was a word. But in recent years we have fallen behind. In 2019, a report rated our digital readiness as rudimental, on par with nations like Rwanda, Nigeria and Kenya. It’s disappointing to be a follower when we were once a nation that led the world with easy, cheap debit using EFTPOS.
Behind the scenes, though, we’ve been working hard to raise our game. Now, New Zealand is one of a handful of nations with an open banking product in widespread use, and we might be the only country that’s taken open banking straight to mobile. Online EFTPOS transactions are growing exponentially each year. Kiwis are embracing this open banking product because it’s easy and secure for consumers, and it’s cost-effective for merchants.
The big banks are all on board – let’s grab the opportunity with both hands
Aotearoa now has the opportunity to step up and reclaim our title as world leaders in banking innovation. It’s time to put our stake in the ground and embrace a national digital wallet. Our big four banks are now all on board with Online EFTPOS: ANZ, ASB, BNZ and Westpac; plus we also have the Cooperative Bank and Heartland. Between them, these six banks cover close to 90% of New Zealand consumers.
With that level of coverage, we can launch a national digital wallet that will set Kiwi consumers up for the digital future. Open banking means your wallet is connected to a safe digital infrastructure. When you want to send your information to a third party, it can happen via the Open API, from your banking app to a merchant, a lender or a friend.
We’re not talking about a basic app where you need to transfer money before you can spend it, like some digital wallets already in market. This would be a genuinely pioneering approach which replaces your entire physical wallet and keeps your information safer and more private than your old billfold ever could. Now, you stand at the supermarket checkout and need to produce a card to pay, a loyalty card, an ID to buy your bottle of sav blanc, and take a paper fuel discount voucher – it’s a three-minute process at best. With a digital wallet, this could all be completed in a single tap of your phone to the contactless terminal – which could reduce queues and speed up the shopping experience for everyone.
The infrastructure is already in place
These ideas will revolutionise the ways we pay and bank. This is a future where you no longer need to carry your driver’s licence, your loyalty cards or your passport – you only need your phone. And if you lose your phone, nobody else can access your banking app, so you just download your banking app on your new phone and it’s all there for you. When the Reserve Bank launches a central digital currency, you can store yours in your digital wallet.
Although it sounds futuristic, the infrastructure we need to deliver this is already in place. Worldline is pioneering the use of blockchain and open banking in Europe, starting with peer-to-peer offline payments and working towards digital currency. In Austria, Worldline is already delivering digital identification with great success. You can watch an explainer of the infrastructure here.
Digital wallets are only a small step, from a technology perspective – just a small hop up from Online EFTPOS, using existing infrastructure. In a practical sense, though, this is a major leap ahead for Kiwi consumers and businesses. Using Open to create digital wallets for New Zealanders will set us up for the digital economy of the future.