Next steps for New Zealand Open banking – why the contingent workforce will drive change
The government of New Zealand recently said that it would implement open banking over the next two years, making it one of the first industries to have regulations granting customers complete ownership to their financial data.
New Zealanders will find it simpler to compare mortgage rates, apply for loans, and switch banks thanks to open banking, according to a statement from the Minister
Individuals will have more control over their accounts and finance, and with cots of living surging globally, open baking adoption cannot come at a better time for individuals.
So, what is banking, how has it been adopted globally and how can the contingent workforce help firms drive digitalisation, as New Zealand banks embrace a new era of banking?
Defining open banking
According to Investopedia “Open bank data” is another name for open banking. Through the use of application programming interfaces, the banking practise known as “open banking” gives third-party financial service providers unrestricted access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions (APIs).
Under open banking, banks give third-party service providers—typically software start-ups and online financial service providers—access to and control over the personal and financial information of their consumers. Customers typically have to give the bank their consent in some way, such as by ticking a box on a terms-of-service screen in an online app. The provided data of the client (as well as information about the customer’s financial counterparties) can then be used by third-party providers APIs. The customer’s accounts and transaction history may be compared to a variety of financial service possibilities, data from participating financial institutions and customers may be combined to generate marketing profiles, and new transactions and account adjustments may be made on the client’s behalf.
Global adoption trends
New Zealand is not the only nation embracing the benefits of open banking and digitisation. Countries such as the UK has made significant investments in digitising the market over the past ten years. In the UK, open banking now has 5 million customers as of this year. Even while this is far behind where experts had predicted the technology would be, it’s still an important achievement.
Adoption differs not just due to legal variations but also due to the payment culture. According to sifted, as individuals are accustomed to interacting with their bank accounts rather than their cards, open banking is gaining traction in the Baltics and the Nordic countries. It was also mentioned Spain and Germany, who scored a six and an eight respectively on the league table, as two teams to keep an eye on.
In terms of US adoption, the primary distinction between open banking in the US and Europe is that the US adopts a market-led strategy without significant government engagement or oversight. This indicates that the initiative’s use and comprehension are growing naturally within the sector[1].
What are the next steps for New Zealand
The move to open banking comes at a time when the New Zealand Prime Minister has encouraged banks who are making record profits to “do what’s right” and support their clients through hard times. The government of the nation views open banking as an extra instrument for fostering competition and guaranteeing customers are “getting a fair bargain.”
The government official also agrees that “the banking sector is a suitable starting point for rolling out consumer data rights” because the sector has made great progress towards Open Banking on its own. Since banking was also Australia’s first industry to be designated for Open Banking, New Zealand might take inspiration from Australia. The news release concluded by stating that a few New Zealand institutions have proactively begun constructing the necessary infrastructure to support a CDR.
It also comes at a time when innovation and general banking updates need to adhere to world standards. This will be a ‘big step’ towards digitisation of banks, and many will need to start adopting new technology, processes, and talent to help drive this change.
How the contingent workforce can help drive innovation
To get great talent in open banking needs effort and investment. Firms will need to understand where to look for the right people who have the key skills to not only drive innovation, but asses the risk when it comes to open banking implementation, especially for banks at early stages of implementation.
Many will turn to the contingent workforce to help get additional support in terms of technology integration but also investigation. This new adoption will need constant testing and most of all a key focus on getting all aspects of compliance right.
Compliance is king, especially when you are integrating new technology into current systems or processes. Every aspect of your compliance function needs careful review and improvement, but since compliance teams are already under a lot of BAU pressure, many find it difficult to have a true understanding of what additional improvements need to be made, and often in a short amount of time. This is a persistent challenge and issue with getting compliance technology and automation right.
Teams of contingent resources may ensure that “no stone is left unturned,” and in a highly competitive regulatory market, recruiting contingent resources can be a game-changer in identifying the gaps in your risk assessments when it comes to Open Banking implementation and developing actionable strategies to fill them.
Using the expertise of contingent resourcing can offer many firms breathing space in terms of getting Open Banking integration right the first time, by resolving any issues their compliance controls may have or ensuing legacy systems and new technology integrate.
Setting up the right teams to ensure any gaps are found will be key for firms this year as regulators place more pressure on financial service participants to strengthen current compliance systems and controls.
[1] Kazoulis, Antonis. “Open Banking around the World: USA, Australia, Brazil and More.” Nordigen.com, 16 Mar. 2022, nordigen.com/en/blog/open-banking-around-world/.
