Speech to Payments NZ ‘The Hub’

Introduction

Tēnā kotou katoa. Thank you for the invitation to speak at The Hub 2019. It’s great to be here to launch the API Centre and it’s also fitting that we’re launching it as part of Techweek.

Nearly a year ago I spoke at The Point 2018, and outlined my vision and expectations, relating to payment systems and open banking in New Zealand.

At that time I outlined my priority: to make a difference for everyday New Zealanders.

It is this Government’s enduring commitment to deliver an inclusive and sustainable economy – and to ensure the benefits of that growing economy are shared more fairly.

I also shared my view that this Government wants to foster innovation in payments – and that given our history in payments innovation, there is no excuse not to make progress both in product and price.

Today, I’ll update you on my thoughts about the work that Payments NZ has been leading to date and where I’d like to see us progress innovation in financial services.

I’d also like to respond to a few comments and themes I’ve been hearing from the industry. I will finish by taking questions.

Why open banking?

So, to return to why I believe in open banking.

Open banking offers a number of opportunities to add tangible value to all New Zealanders by;

• improving payments systems that benefits small to big business and consumers alike,
• lifting financial capability,
• improving the flow of commerce and financial transactions,
• encouraging digital innovation and transformation, and
• enhancing competition in the marketplace.

At its core, open banking is about giving consumers control of their money and data, and allowing them to benefit from the innovative uses that data allows.

It’s about acknowledging that no single financial institution alone has a monopoly on good ideas.

And it’s about recognising that it is an opportunity for substantial economic and social benefits if we get this right.

Next week the Government will be delivering its first wellbeing budget. It includes a priority to ‘support a thriving nation in the digital age through innovation, social and economic opportunities.’

While I don’t expect the opportunities of open banking to be realised overnight, it does present a real chance for us to contribute to this priority by building a more productive, competitive and innovative economy.

So, let’s talk a little bit about what we’ve achieved to date in New Zealand.

The API Centre

Over the last year and a half, New Zealand has been quietly progressing towards open banking.

Some of our top payments and fintech brains have been working together on developing a shared API framework and setting the first standards.

We’ve had three of our largest banks and three innovative New Zealand businesses working to build and road-test the standards to make sure that they’re fit for purpose.

We’ve had at least 90 organisations accessing, thinking about and maybe even starting to build to the standards.

This work leads us to today, the launch of the Payments NZ API Centre, which closely follows the release of Version 1.0 of the Payments Initiation and Account information APIs.

This is real progress that offers data-driven innovation and industry collaboration.

Bridging the gap

I want to acknowledge the work that has been put in by many of you in this room, and I do want to thank you for that.

But I think it’s fair to say that there is still more work to be done, and some things I’d expect to see, before I can be confident that this industry-led approach will go the distance.

First, I want to see all major New Zealand banks participating in the API Centre and working with third-parties. I know that different banks are at different stages of readiness to participate in open banking, and that it takes time and money to get there. However, if fintechs are to invest and develop services, they need to know that they will have access to enough New Zealand consumers to make these investments viable.

Second, I want to see access to APIs to be provided in a way that enables broad participation. This means that commercial terms should be transparent, reasonable and not a barrier to participation. We know from what’s happened to EFTPOS in New Zealand and the lack of ongoing investment in that technology that ‘free’ isn’t necessarily the answer. But there is no point developing shiny APIs if no one can afford to use them.

Third, I think it is important that there be as much standardisation as possible in terms of the APIs used and the terms of access. I understand that each bank has slightly different processes and approaches, and that it may be tempting to develop services in a different order, or to get ahead of the pack. However, standardisation ultimately makes it easier and more efficient for fintechs and banks to partner with each other, rather than reinventing the wheel at each step. This ultimately benefits the customer.

Finally, I’d encourage everyone to think broadly about how to get the most value from data. Don’t just stop with what we have now – continue to develop, innovate and transform.

Government’s role

I am aware of some critiques regarding the Government not being sufficiently clear about what it is looking to achieve with open banking.

Some are concerned that we are asking businesses to make million dollar investments, without telling them what to invest in, or in what order, or by when.

I understand your concern, but I do not see it as my role to tell industry how to innovate.

I recognise that different services will require different APIs, and that these can’t all be developed at once.

I’d prefer to see banks working together to roll out APIs in tandem with a shared vision for an end-point, rather than going out on their own and producing a fragmented payments and banking data ecosystem.

In my view, no one is better placed to set the technical standards for open APIs than the people in this room – certainly not government.

The other criticism that I’ve heard is that Government has been sitting on the sidelines, and needs to regulate if we are to secure the benefits associated with open banking. Well, that may well be true in time. I recognise that the industry’s interpretation of ‘open’ may not exactly align with mine. I also recognise that the benefits associated with open data do not stop with banking, and that there aren’t the same industry-led initiatives going on in other sectors. But for now, I want to assure you that I am genuinely focussed on giving industry-led open banking a real chance to succeed before we have any other consideration.

Summing up

I’d like to conclude by congratulating everyone involved for your hard work in getting to today’s launch of the API Centre.

I want to reiterate my belief that open banking offers a chance for a more productive, competitive, and innovative economy focussed around fintech. And that I want to see the benefits for consumers, who gain from use of their data.

And, finally – if you’re not on board already – now’s the time. I’m now happy to take questions.