With a Payments NZ-led open banking pilot under way, ANZ New Zealand CEO David Hisco says the country needs a bigger vision and it needs to go beyond banking.
When I started banking as a teller 35 years ago, "customer data" was something you filed away on paper in the cabinets behind the counter, ready to retrieve when that customer came back into the branch.
As banking has digitised, the presentation, storing and moving of customer data has changed dramatically. But holding on to it and keeping it safe — just like people's money — has remained a basic tenet of our role as a bank. It's fundamental to the trust customers place in us and something ANZ has been doing in New Zealand since 1840.
Now we're at a pivotal point in the customer data story — what's called "open banking", and the sharing of that data.
Open banking means customers, including businesses, will soon have the ability to tell their banks to share their data with third parties in order to access new financial products and services.
On face value, it sounds like something the CEO of a big bank would be strongly opposed to — but I'm all for it. I think it's a positive evolution for the banking industry for two reasons.
Firstly, it gives customers control of their own data. Like the money in the bank, customers can use the data we hold as they wish. Open banking will change people's relationship with their money by providing more options and more tools to help them manage it and make informed decisions. That's good for everyone.
Take, for example, a company which has developed a budgeting service. A customer signs up for the service, and gives permission for the bank they hold accounts with to provide information on their spending and savings activity. These account activities are then pulled through to the budgeting service where they can be analysed.
Yes, it will increase competition for the main players, but the New Zealand banking market is already an open, competitive and highly regarded environment compared with other markets.
Secondly, open banking will foster innovation. New Zealand banks are strongly driven by the goal of making customer banking interactions easier, but this will create a further incentive to pick up performance.
As a bank, we can't do everything, and we've never shied away from working with companies to provide additional value for our customers. We already have relationships which involve the customer-consented sharing of data with the likes of Apple, Google, Xero, MYOB, CashManager and Smart Payroll.
But there's a lot more to do and there's an opportunity staring New Zealand in the face. The real economic opportunity for New Zealand lies in fostering an "open data economy", not just an open banking one.
The hallmark of an open data economy is that all industries holding data about their customers — banks, insurers, supermarkets, telcos, power companies, airlines and others — should be required to share this data if a customer requests it.
That also means third parties using that data should be required to share data back freely — "reciprocity" — rather than making only one party in the relationship accountable.
An open data economy, where there is easier access to information and knowledge, has huge potential benefits for New Zealand. These include new businesses starting up, more opportunities for research communities, improved policy development, and more efficient delivery of social services like welfare, healthcare and policing.
But it's also a huge balancing act for industries and government entities.
The data is the property of the consumer, but it must also be guarded carefully. And consumer consent to use it must be done with their complete understanding of what they're getting themselves in for.
Nevertheless, McKinsey research has identified consumers as having the most to gain from open data, which will make things more efficient, save time and help us make better decisions.
The most exciting are the bits we can't imagine yet — because when you take big chunks of data and make it available to clever people with the goal of solving problems, the possibilities are mind-boggling.
As an example, 10 years ago Transport for London opened up its data and has worked with third parties to develop more than 600 apps, used by more than 40 per cent of Londoners to better plan their journeys. Deloitte estimates this has generated about £130 million for London's economy in improved services and saved time.
What could be done to make our lives easier with real time data on climate, or on disaster situations and emergency responses? What would a big pool of health-related data mean for people developing life-saving medications? Or similarly, education-related data for those developing programmes for our children?
New Zealand should be able to establish an open data economy much more easily than our more populous counterparts and become a test case for other countries. This could be the technological and productivity leap forward successive New Zealand Governments have looked for.
We can look to Estonia with a population of about 1.3 million, which has become Europe's poster child of digital and data innovation. It has a data exchange platform called "X-Road" that connects public and private databases, including 99 per cent of state services and 52,000 organisations.
Not only has it improved the delivery of services for its people but an estimated 800 years of working time have been saved. This platform is now being used by other European countries, which enables data to be easily shared across borders.
The biggest challenge around an open data economy is standardising the way data is stored, and in accessible formats. It's currently held differently across companies even within industries. Some banks store mortgage data differently from others and that's not even getting into the issue of different kinds of data for similar but different products.
New Zealand industries would be short-sighted not to see the benefits of progressing this work and the technological infrastructure to deliver it, but I think the ultimate vision, along with guardrails and direction, is needed from government.
Just as X-Road was an Estonian Government-led initiative, Singapore's "Smart Nation" is an initiative co-ordinated by the Government to drive the economy and support better living using technology and open data.
Industry has been driving innovation within a government framework which has articulated a vision of transformation across the economy, government and society.
An open data economy provides tremendous opportunities but also raises a raft of ethical, legal, security and civil liberty-type questions that have to be worked through for a place like New Zealand.
Changes like this take longer than you imagine but once they do, they transform industries and societies in ways that it's hard to envisage now. This has been true of the internet, email and mobile phones. Just as coal and steel was to the industrial revolution, so too will open data be to the digital economy.
I'm all for it, so long as we can be convinced every party we share our customers' data with will treat it "as safe as a bank".