Sometimes in life, we get so accustomed to working around little problems that we barely think about them. A creaky door, a chipped mug, an internet outage. It’s the same when it comes to payments: we just keep working with our old ways of paying and ignoring all those small inconveniences. Take splitting the bill at a restaurant, for instance. It shouldn’t have to mean waiting around for every person to make a separate transaction. Or think about international scheme cards: we need them to shop online, so it’s hard to get rid of them for people who would like only to have an EFTPOS card. And keeping track of all our accounts can be tricky; it should be easier than it is. We work around these problems, but we really shouldn’t have to.
Open banking is a way to help solve some of these payment problems and come up with solutions for other problems we haven’t even thought about.
What is open banking?
Open banking is a platform that safely shares access to banking information between banks and product providers. It gives us greater access to and control over our own data. It keeps our data safe and uses that information to allow data and money to flow seamlessly between banks and third parties. It also means New Zealand tech companies can design new payment and financial products tailored especially for Kiwis.
Currently, most of our payments are overseen by the banks and the major credit card companies, which can lead to high fees and a lack of consumer choice. The open platform would democratise our banking product environment, giving local innovators the chance to solve day-to-day payment problems.
What are the advantages of open banking?
Open banking would encourage competition between service providers, leading not only to better prices but also more innovative products and services. It can deliver more affordable ways to accept payments for Kiwi merchants and consumers. It would foster innovation in the fintech sector, providing an incentive to develop new apps and products. In means the potential for more technologies like our own Online EFTPOS and Click. It also opens the doorway for anyone – not just payments companies – to come up with innovative products and services. Open banking could pave the way for:
- Integrated one-step age verification and payments process when paying for alcohol.
- An easy way to split payments between groups at restaurants.
- A one-stop digital wallet across all your banks, including identification.
- Simple financial management for all your accounts in one place.
- Integrated loyalty programmes – no more separate cards or details required at point of sale.
- Completely card- and device-free payments, including e-receipts, for hands-free digital shopping.
- Receive, review and pay all your bills from one place.
You are in the driver’s seat
When it comes to how your data is shared, you are always in the driver’s seat. No bank ever shares data with a third party unless you give permission. When the data is shared, it goes through a secure link that is similar to the technology used when other types of payments are processed.
At present, 1.5 million Kiwis have access to the existing open network through their banks, but the technology only comes into use if they agree to share their information with a product or app like Online Eftpos. With greater uptake of open from New Zealand’s other major banks, we can extend the availability of open banking to all account holders.
Putting New Zealand payments on the world stage again
We led the world with EFTPOS and it remains a brilliant, simple and cost-effective way to pay. If New Zealand can embrace open banking, we can once again write our own story when it comes to making everyday finances more consumer friendly. Open banking would keep us globally competitive, encourage our innovators and hopefully give all of us the tools to make better financial decisions for our own situations.