Critical business issue addressed as BNZ adopts open banking.
A tech revolution re-shaping the payments industry will have a massive impact on New Zealand businesses, a leading finance industry expert believes.
Joe Rastrick, Head of Paytech and Emerging Payments at BNZ, says open banking – a process which through the secure sharing of customer data between financial institutions opens the way for near-instant payments to businesses – is poised to take-off here.
While open banking is relatively new in New Zealand – all four major banks are required to fully implement it mid-next year and Kiwibank from 2026 - BNZ is ahead of the game, with up to 150 of its business customers already working to connect with them via secure APIs (Application Programming Interfaces).
The bank is receiving around three to four inquiries about open banking every week and Rastrick believes it will have a massive impact for businesses and customers alike. “It won’t totally replace traditional ways of paying, but it will give everyone more options”
“Being paid on time and maintaining a robust cash flow are critical in business and the introduction of open banking places a premium on meeting these needs,” he says. “It will allow New Zealanders to pay who they want, when they want and how they want.”
Rastrick says open banking empowers business owners with a more connected and automated financial experience by ensuring smooth and secure transactions – and gives customers a better experience. “This forward-thinking approach cements BNZ’s commitment to innovation by providing businesses with cutting edge solutions.”
Rastrick says he is passionate about the future of payments in New Zealand and how it can benefit everyone: businesses, consumers and NZ Inc.
One of these benefits, he believes, is in the opportunities it opens for New Zealand tech companies. “Open banking has led to the development of some great technology here and while it exists to support New Zealand businesses, there is an opportunity to export it globally and I’m all for that,” he says.
“Tech is the fastest growing industry in New Zealand; we have a tremendous attitude of innovation and don’t fear giving something a go. Invariably we do it better.”
Like other industries, the payments sector has been swept up in the technological revolution of the last 20 years. Payments NZ (which oversees and governs New Zealand’s payments system) said in a 2020 report that customer needs and expectations have been influenced by this revolution.
The report said global trends show an increasing demand to initiate and receive payments 24/7/365, to do so on a platform of the customer’s choice and to use information other than a bank account number to complete the payment.
Open banking allows the secure sharing of customer data between financial institutions so companies can offer alternative deals and enables customers to have more choice in who they want to share their financial data with, and how they want to make payments.
It will also encourage greater competition by allowing consumers to access a wider range of products and services from different providers, while customers will be able to view data from multiple accounts in one place.
With access to more comprehensive data, banks will be able to offer improved payment experiences, providing for greater financial inclusion.
Security is a key consideration, says Rastrick. While the government is working to implement a Consumer Data Rights (CDR) framework and customers have the absolute right to consent sharing their data, BNZ has its own processes in place.
“People are concerned about security and they have every right to be,” he says. “There is a lot of cyber fraud and people are wary of anything new. But we are still a trusted gatekeeper of people’s information and we don’t give out APIs to businesses willy nilly.
“Customers will have peace of mind that the information they consent to sharing is passing through highly secure and trusted APIs.”
He says only third-party providers who have gone through the BNZ’s rigorous due diligence process will have access to its APIs. They must also sign the BNZ API agreement designed to protect a customer’s privacy and only use data with their consent.
Data security standards and encryption processes are built into the API technology and must be followed.
Rastrick says if a customer is doing something through an approved third party - like securely making a payment or sharing account information – the third party will always send a request to the Bank. BNZ uses two layers of authentication to confirm the customer’s identity, so they’ll have the comfort knowing it’s at the same security level as current payments methods.
For more information: bnz.co.nz/business
This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.