As Aotearoa New Zealand progresses its Consumer Data Right (CDR), the opportunity exists for right-sized regulation to complement the industry-led development and implementation of open banking in Aotearoa.

At Payments NZ, we’ve long supported having a fit-for-purpose CDR framework in Aotearoa.

Enabling consumers greater access to and control over their own financial data can lead to more innovation and this in turn allows greater economic prosperity and financial wellbeing for New Zealanders.

Across the last five years Payments NZ, through the API Centre and our partners, has invested more than 100,000 hours to create a fit-for-purpose open banking framework including standards, rules, guidelines and tools to ensure fast, secure, user-friendly data sharing.

The government’s announcement in November last year that banking will be the first sector designated under an Aotearoa CDR means 2023 has the potential to be a year of exciting changes in the finance space.

What does open banking mean in Aotearoa?

Different countries will have different interpretations of what open banking means to them.

In Aotearoa, open banking means banks will, with the consent of the customer, make specific customer and transaction data available to other service providers and offer alternative ways to make payments.

This creates a faster, more transparent, and innovative financial ecosystem which puts more power in the hands of consumers. Open banking will play an important role in guiding the use of data across the industry, providing improved outcomes for consumers, small businesses, financial technology platforms (fintechs/paytechs), and financial institutions amongst others.

Shifting to this paradigm will move us to a world where consumers have more control over how and when their data is used.

What are our goals?

As part of our work with the industry, the Payments NZ API Centre has developed a framework of industry practices and API standards governed by rules and guidelines that are currently being used within Aotearoa’s open banking ecosystem.

API standards have many benefits, which includes making it faster and more cost effective for third parties to set up their innovative propositions, for example to offer more advanced budgeting tools and faster, more accurate risk assessments for loans, all of which can help consumers with financial wellbeing.

The work we have done will help ensure any transformational open banking changes for our economy are implemented as quickly as possible to deliver a progressive and innovative ecosystem for all.

The work we’re doing through our API Centre is pivotal in enabling the industry to come together to co-design and collaborate, developing the level of detail and tools needed to expand open banking initiatives beyond what currently exists.

What’s next?

In 2023, we will deliver an industry implementation plan for our API standards, which will provide greater industry certainty, enabling investment in new and innovative products and facilitating greater customer choice.

Payments NZ wants to continue to be at the heart of how open banking is implemented in Aotearoa, including with the introduction of the CDR. We’re looking forward to working closely with government and the industry to support the successful implementation of this new legislation, which will ultimately see more open banking products and services brought to life to benefit consumers and our economy.

We’re also working on other areas which will very likely be covered by a CDR, including partnering agreements and what an accreditation framework could look like. The API Centre has already delivered a centralised due diligence assessment service to make partnering between banks and our Third Party organisations easier.

The centre will soon release version 3.0 of our current API standards for Account Information and Payment Initiation. This update will include two-way notifications, multi-authorisation for payments and several security upgrades. We’re also in the middle of establishing a proof-of-concept structure which will allow our Community Contributors to test and ‘live prove’ in a controlled environment with API Providers.

How can you get involved?

There are a range of ways you can get involved with the API Centre. You can subscribe to receive email updates, or join the centre for closer involvement with the standards.

Community Contributors get access to our sandbox and organisations that join as a Standards User can also use the standards in partnership with other registered Standards Users.