New Zealand Banking Trends 2023

The world economy is fragile at the dawn of 2023, and a major reordering seems necessary. Banks around the world are looking for ways to put their operations on a sustainable path to move into a brighter future. This insight pinpoints the expected state of New Zealand banking in 2023, and the more important trends banks need to follow.

Fast-track to reaching global level in 2023

2023 will be a year of disruption for the banking and finance market. Addressing industry challenges will make financial institutions more robust, lean, and agile.

A key learning is that local banks need to make cross-border transactions swifter and smoother. Digital transformation and regulatory adaptability are crucial drivers of international success for New Zealand banks in 2023. Ensuring they have the right processes and systems that are regulatory facing, and have tested new products and services with customer-centricity, will help local banks reach international banking standards.

The customer comes first – mitigating challenges

The institutional banks changed their operations enormously during the pandemic, and their customers are hoping for better banking in 2023. Amid the persisting complexities in the banking sector in New Zealand, banking customers have highlighted several key banking needs:

  • Process reliability
  • Better e-Commerce
  • Quicker digital journeys
  • Improved risk management

Recent statements by CEOs of New Zealand banks hint toward getting the above challenges resolved, as concerns about the ongoing uncertainty of rates, lending, regulations, the global economy, and consumers’ financial health rises. The banking landscape in New Zealand is changing fast as the power shifts to Profitable Neobanks, privacy leaders, and the new demands placed by the next banking generation -Gen Z.

According to research organisations, transaction value in the Neobanking segment in New Zealand  reached NZDD 1.68 billion in 2022. The market is growing at an annual growth rate of 13.87% (2022-2027) thereby reaching an estimated NZD3.25 billion by 2027. Slow economic growth and rising interest rates will lead to tough conditions for banks in 2023.

New Zealand Banking Trends to Watch in 2023

The banking and finance sectors are changing fast but here are the main trends to watch in 2023:

Trend 1: Gen Z breaks into the financial mainstream

With a significant Gen Z population looking for banking services, banks in New Zealand need a different approach to turn this ‘netizen’ generation into their customers.

Gen Z is tech savvy, and they want to have every banking service online. With more Gen Z adults than ever, New Zealand banks need to strengthen their digital strategy to acquire Gen Z customers.

Trend 2: Privacy and data protection are must haves

The banks prioritising consumer data protection in 2023 are more likely to win more customers.  Data protection has been listed as the top need for retail banking customers in 2023. With high levels of fraud, customers need to feel that their data is in safe hands. Data breaches of various kinds can put New Zealand banks in trouble and that’s why implementing data protection protocols is mandatory for all banks.

Trend 3: Growth vs. profitability dilemma for neobanks

Digital banks are struggling with growth as their investors prioritise profitability overgrowth. FinTechs are under increasing pressure to monetise their services to win investors’ hearts.

Neobanks are popular in New Zealand because their mobile and desktop applications are simple,  advanced and provide smoother digital experiences than most conventional banks.

Trend 4: Growing embedded finance gets growing pains

After 2022 proved to be a good year for embedded finance, new avenues will open for embedded financial service providers in 2023. However, this growth comes with some pain points.

Data security, customer risk detection, and access to capital are the major pain points companies within the embedded finance sector will be experiencing as they grow in 2023.

Trend 5: New Zealand government to launch open banking by 2024

In 2021 the New Zealand government agreed to establish a consumer data rights framework a year ago. The government will launch open banking by 2024 as the concept becomes commonplace among similar economies. Banking data will be the first to be brought under New Zealand’s framework. The “open banking” regulations will ask traditional banks to make client and transaction data available to other financial service providers. Thus, banks will have to add a data sharing feature to their systems.

Importance of Talent for Banking Sector in 2023

The financial industry is a highly regulated sector in New Zealand and the rising pressure of AML/CFT regulations requires banking institutions to hire trained and experienced staff members for compliance and other operations. What banks need is a tech savvy workforce that has a grip on legal and regulatory framework. The full knowledge of banking trends and evolving regulatory environment is crucial to make businesses resilient and progressive but banking institutions struggle with best-suited talent. Many banks have overcome talent deficiency by hiring through a contingent workforce.

The right talent deal with the complexity of compliance and new age threats

It is clear to see that from the upcoming trends, fighting financial crime will require additional skilled resources, which is why the future of resilient financial crime fighting will rely on the contingent workforce.

With new trends in hiring and retaining key talent, more organisations are turning to the contingent workforce model to help them deliver on critical projects, deal with surges in work, and get back to business as usual. The contingent workforce tackles the significant challenge of rapid and cost-effective staffing without the need for lengthy and time-consuming selection processes, interviews, or onboarding. This is also seen in the utilisation of offshore contingent models to access key talent that would otherwise be difficult to find locally.

Most firms’ permanent recruitment procedures are slow in a fast-paced market. Recruiting good, competent people into perm roles can take months, which is why there has been such a high demand for skilled compliance contingent professionals in 2022, and this is expected to rise in 2023.

The pandemic created a new era of talent and recruitment with many firms struggling to resume BAU as additional regulatory and risk compliance requirements are placed on their already thin stretched teams.

Utilising the expertise of contingent resourcing can offer many firms breathing space in terms of resolving any issues their AML controls may have. Setting up the right teams to ensure any gaps are identified will be key for firms in 2023 and into the coming years, as regulators place more pressure on financial service participants to strengthen current compliance systems and controls.

If your business has been impacted by additional regulatory or compliance pressures and needs additional staffing support in your compliance departments, speak to us to see how we can help in supplying experienced and effective members to your team.

Works Cited

Abbott, Michael. “Banking Top 10 Trends for 2022 | Accenture.”, 10 Jan. 2023, Accessed 11 Jan. 2023.

Clarke, Alyson. “Predictions 2023: Banks Will Batten down the Hatches but Prepare for the Upturn.” Forrester, 1 Nov. 2022, Accessed 3 Jan. 2023.

Craymer, Lucy. “New Zealand Government to Introduce “Open Banking” for Consumers.” Reuters, 9 Nov. 2022, Accessed 4 Jan. 2023.

McNamee, Jenna. “Top Banking Trends to Watch in 2023.” Insider Intelligence, 3 Jan. 2023, Accessed 4 Jan. 2023.

Shilling, Mark, and Anna Celner. “2020 Banking and Capital Markets Outlook.” Deloitte Insights, 3 Dec. 2020, Accessed 3 Jan. 2023.

Weiss, Marc. “Beyond the Payment: Institutional Banking Trends for 2023.” Mendix, 14 Dec. 2022, Accessed 4 Jan. 2023.