NBDT's Support Greater Competition in NZ Banking Sector
Last week’s announcement by the Government that the Commerce Commission will undertake a market study into competition in the New Zealand’s banking sector is being welcomed by Non-Bank Deposit Takers.
The NBDT sector is currently comprised of 15 institutions, including building societies, credit unions and regulated finance companies. All are licensed and prudentially regulated by the Reserve Bank.
“A study like this, which focusses on how New Zealanders access banking services, and the barriers to competition in the market, is only going to be a good thing for customers and the industry as a whole,” says Daniel McGrath, CEO of Xceda Finance and a spokesperson for twelve NBDT’s.
“We’re focussed on servicing customers whose needs aren’t always well served by the bigger banks. So we welcome the Government’s focus on trying to address actual or perceived shortcomings of the current market.”
The launch of the study also coincides with the passage of the new Deposit Takers Act. The Act introduces a single regulatory regime for banks and NBDTs under the RBNZ, and also establishes a deposit compensation scheme to allow consumers to have confidence that their funds in banks and NBDTs are safe.
“The Act is a tangible way in which competition can be fostered in the NZ banking sector. By including NBDTs in the same supervisory regime as the banks, it allows customers to have confidence in a wider range of financial institutions; not just the main banks,” he said.
“It also encourages more New Zealand owned banks and NBDTs to grow and provide credible alternatives for customers. The key is to ensure they aren’t stifled by the same level of regulations as the big banks, but by a proportionate regulatory framework that encourages growth.”
Mr McGrath noted that in announcing the study, the Government sees potential for more innovation in products and services.
“We see the growing fintech industry as an exciting opportunity to do just that. Australian and international markets have shown that fintech products such as open banking drive better services for customers.
“And it’s typically been the smaller and emerging institutions - often referred to as ‘challenger or neo banks’- that are better able to deliver product innovation given the absence of larger legacy systems. So the ability to deliver innovation as a driver of competition must be a key consideration of the Commerce Commission study.”
Representing the following NBDTs:
Christian Savings Limited | Credit Union Auckland | Finance Direct Limited | Fisher & Paykel Credit Union | General Finance Limited | Gold Band Limited | Heretaunga Building Society |Mutual Credit Finance Limited | Nelson Building Society | Unity Credit Union |Wairarapa Building Society | Xceda Finance Limited
Contact: Daniel McGrath, CEO Xceda Finance Limited, d.mcgrath@xceda.co.nz │ Mob: 021 0558 449