Aotearoa New Zealand’s four largest banks will all be live with the Payments NZ API Centre’s open banking standards over the next 18 months. This announcement marks a significant milestone in Aotearoa’s open banking journey, enabling consumers to benefit from more choice when making payments and sharing their financial data.
The API Centre is leading the development of open banking in Aotearoa and today published its Minimum Open Banking Implementation Plan. This plan sets out firm timelines for all four of the country’s largest banks to all be operationally and technically ready to partner using the centre’s standards.
Four of the banks – ANZ, ASB, BNZ, and Westpac – must be ready by May 2024 with the v2.1 Payment Initiation API standard, with the v2.1 Account Information API standard to follow by November 2024. BNZ is already live with the v2.1 Payment Initiation standard and this plan now ensures all four banks will be aligned on the same version of both standards at the same time. A fifth bank, Kiwibank, is also included in the plan and has an implementation timeline to be live with both standards by May and November 2026.
Payments NZ chief executive Steve Wiggins says the API Centre has open banking standards and protocols that delivers the competition and innovation in financial services and data sharing that Aotearoa needs and puts the customer in control.
Open banking is already underway in Aotearoa, with some banks and third parties already partnering to deliver solutions to consumers, and Wiggins says setting this implementation timeline will bring scale and the broad market coverage that is needed.
“As leaders of open banking in Aotearoa, we are now committing to firm timeframes for the four biggest banks to be aligned to successfully implement our open banking standards. Once all five banks are live, it will represent coverage of more than 90% of all consumer bank accounts," says Wiggins.
“This is an important step towards enabling easier and faster partnerships between banks and third parties who use our standards and protocols, allowing them to bring financial services innovations that will benefit consumers to market more effectively and efficiently. Third parties, such as fintechs and payments service providers, which are interested in partnering with banks to develop these products and services now have the certainty to plan ahead.
“Open banking is a powerful tool for enabling economic prosperity and financial wellbeing for consumers in Aotearoa. It enables consumers to have more choice in who they want to share their financial data with and how they want to make payments.
“It encourages greater competition and customer innovation by allowing consumers to access a wider range of products and services from different providers. Over time, more new players will join the ecosystem and I look forward to seeing innovation thrive as a result.”
Payments NZ and its API Council (which is made up of representatives from across the industry) set the implementation plan after extensive industry consultation.
“We’re extremely proud of reaching this milestone to really boost the growth of open banking enabled services in the market in Aotearoa,” says Wiggins.
Open banking is one core component of the payments ecosystem of the future. Payments NZ is also leading several other projects to modernise the country’s payments system, including ongoing investigations into next-generation real-time payment capabilities. Last week, Payments NZ wrapped up a significant project to move Aotearoa to 7-day payments, 365 days a year, and earlier in the year, they implemented SWIFT’s new ISO 20022 messaging standard for cross-border payments.
What is open banking?
Open banking refers to a system in which customers can make payments and instruct their banks to share their financial data, such as account information and transaction data, with third party providers like fintechs.
The safest and most secure way to share customer data is through standardised Application Programming Interfaces (APIs). APIs work as a highly secure channel, allowing two different systems (for example, a bank and a fintech) to safely communicate with each other and share information. APIs are essential to open banking because they address concerns around security, privacy and customer authentication and consent.
What is the API Centre?
Working with the industry (from banks to startups) the API Centre is co-designing Aotearoa’s open banking future by creating the framework that will ensure fast, secure, user-friendly data sharing – for all New Zealanders.
There are many open banking models around the world. The centre has created and continues to develop a fit-for-purpose open banking framework for Aotearoa. This framework creates a world-class foundation for businesses to provide leading, cost-effective products and services and give consumers confidence in how their data is accessed and shared.
What are the API standards?
The API Centre’s two v2.1 API standards allow a customer to set up and make electronic payments (Payment Initiation) and share their banking data (Account Information) with third party businesses of their choice, with their consent. The two standards are supported by the API Centre’s security profile which ensures the highest level of safety and security for consumers when sharing their data and consenting to third parties acting on their behalf.