The banking industry looks forward to participating in the competition study into retail banking announced by the government today says the New Zealand Banking Association – Te Rangapū Pēke.
“We believe the enquiry will ease any concerns in the community about competition and innovation in the banking industry. Our banks are transparent, and will engage constructively with the Commerce Commission,” says New Zealand Banking Association chief executive Roger Beaumont.
“We have a competitive banking sector, with 16 retail banks operating in New Zealand and easy bank switching. We are open to the opportunity to discuss the contribution banks make to support the New Zealand economy, households, and businesses.
“Switching banks is easy. Your new bank can arrange everything including transferring your funds from your old bank and setting up your recurring payments to your new accounts. This can be done within five working days, and you don’t even need to talk to your old bank.
“Our banks are highly regulated, well capitalised, and profitable. That helps makes them resilient, and with recent overseas bank failures we’ve seen why that’s important.
“In recent years we have seen bank teams tied up with significant regulatory requirements, limiting the ability to focus on new product development. We hope the Commerce Commission will look closely at the regulatory environment as part of its study.
“The government and the banking industry are progressing plans to make ‘open banking’ a reality. This will allow customers to securely share their banking information with other service providers to access other products and services that suit them. This will help make banking even more competitive.
“New Zealanders are well served by their banks and we saw them step up quickly in the North Island flooding and cyclone events earlier this year, making $1.4 billion available in low-cost lending, and donating $6.5 million to disaster relief funds. They also provided loan repayment relief and access to term deposits, and worked closely with government agencies to get cash to impacted areas.
“Banks are among our biggest businesses so their profits look big. They also contribute their fair share to New Zealand. Last year banks made a net profit of $7.18 billion. They also spent $9.1 billion running their businesses and paying tax here. That’s a net positive contribution of $1.92 billion – before you take into account the contribution banks make in funding household and business needs, to the tune of $535 billion. Providing a return to shareholders helps maintain their investment in New Zealand, and ultimately some KiwiSaver funds share in those returns.”
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“The industry would welcome the opportunity to discuss bank profits and the contribution banks make to support the New Zealand economy, households and businesses,” Beaumont said at the time.
Beaumont said NZ’s banks were profitable, well-regulated and resilient, and that was important in the current economic climate.
Reserve Bank of New Zealand
Credit bureau Centrix’s latest data indicated mortgage arrears rose for the seventh consecutive month, with just under 19,000 people behind on repayments, which equated to 1.3 percent of mortgages, while the Bankers Association reported nearly 45 percent of mortgage holders were ahead on their repayments at the end of 2022.
The New Zealand Banking Association submitted in 2019 that gambling providers and their customers could also circumvent that measure, for example by accepting and making deposits using other international payment services such as PayPal, WeChat and AliPay.
Decision makers from government and the financial sector are spending time with financial mentors to get practical insights into their daily work and the assistance they offer clients experiencing vulnerability and financial difficulties.
The initiative, called A Day in the Life, is part of a partnership between FinCap and the New Zealand Banking Association – Te Rangapū Pēke. The partnership, which is funded by NZBA’s member banks, provides $5 million over five years to fund initiatives that support financial mentoring for people in need.
To date 20 decision makers have experienced A Day in the Life, in places ranging from Auckland to Roxburgh.
Banking Ombudsman Nicola Sladden and ANZ’s Managing Director – Personal Banking Ben Kelleher are among those who have experienced A Day in the Life.
Nicola Sladden says: “I was struck by the need to deal with so many different agencies, which highlighted the benefit of the financial mentor providing holistic support.
“In one case a mum, who was the sole breadwinner, could no longer work because of an injury. The issues were dealt with in a compassionate, future-focused, and empowering way. I was really impressed by her optimism for a better future despite the challenging issues.”
Ben Kelleher says: “I saw first-hand the range of circumstances mentors face, much of it inter-generational and often with wider social, health, and family issues to consider.
“From a bank’s perspective, it’s a reminder of why lending responsibly is so important. Making sure people really understand the services we are providing, educating them about how to manage their repayments over the long-term, and the importance of saving.
“The main thing I took away from this was the important role financial mentoring services play in the community. It really is a life-changing experience for someone when you can help them get back on their feet and feeling financially secure.”
FinCap Chief Executive Ruth Smithers says: “We’re really pleased with how A Day in the Life has been able to connect decision makers with financial mentors and their clients in a very practical way.”
New Zealand Banking Chief Executive Chief Executive Roger Beaumont says: “This is a great initiative and I’m delighted it’s come out of our FinCap partnership. The kind of insights that have come through are incredibly valuable.”
In addition to the Day in a Life initiative, other projects funded through the partnership include:
- Banking Sector Collaborations: Community-led initiatives to support financial mentors help their clients connect with banking services in smaller communities.
- Iwi and Pasifika Development: linking financial mentoring services with Iwi and Pasifika people to help develop financial capability for people in financial hardship.
- Workforce Development: Establishing better resources and training for financial mentors to help them assist clients experiencing vulnerability to access banking and other services.
- Data and Insights: Collecting anonymised client information to develop insights into debt management and spending behaviour before and after budgeting intervention.
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“Due to a range of issues, primarily low seismic building ratings that would put staff and customers at risk in case of an earthquake, we have not been able to secure a suitable location.”
“Our banks are part of the communities they serve and responded quickly as the flooding and cyclone events unfolded, making $1.4 billion available in low-cost lending, and donating $6.5 million to disaster relief funds. They also provided loan repayment relief and access to term deposits.”
The new hub in Whangamatā will be located in a stand-alone location and have a multi-bank Smart ATM and a coin and note change service. A concierge will be available to assist customers access the services, which include an ATM, tablet for online banking, and phone. These services will be available in private areas to help ensure confidentiality.