The Commerce Commission published its final report on personal banking on Tuesday, highlighting a lack of competition within the sector, largely controlled by four Australian-owned banks that are generating substantial profits.
Antonia Watson, chief executive of ANZ New Zealand, acknowledged during a Morning Report interview that bank profits in New Zealand surpass those in many international markets.
Watson explained that the large banks must maintain profitability to satisfy their overseas shareholders, suggesting that it is not economically feasible for these institutions to be New Zealand owned. To continue investing in New Zealand, banks need to provide their shareholders with acceptable returns.
She stated, “We must attract foreign capital. We can’t afford to be Kiwi owned, even though I would really prefer it. We lack the $50 billion needed to enable Kiwis to acquire the major banks.”
Watson pushed back against the idea that competition among banks is absent, noting recent reductions in interest rates for home loans as evidence of competitive forces at play. However, she acknowledged there is room for improvement.
She referred to the Commission’s recommendations as “solid” and expressed her support for them, while also mentioning that the banks have been slow to adopt open banking practices.
According to Watson, insufficient regulation is hindering the development of open banking in New Zealand. She pointed out that countries like Australia have advanced in this area due to established consumer data rights and regulatory frameworks.
“We’ve been actively working on open banking… one of our requests has been for regulation. We need a consumer data right that clarifies liability when we share our customers’ data with others, and we would appreciate an accreditation agency to facilitate interactions with fintech companies,” she said.
ASB, BNZ, and Westpac chose not to participate in interviews. Kiwibank also declined an interview but stated its intention to challenge the larger banks.