Kiwibank can't fix banking issues, says Edwards
Competition advocate and 2degrees founder Tex Edwards (pictured above) argued that Kiwibank will not resolve New Zealand’s banking profitability and competition problems, despite the Commerce Commission identifying it as a potential disruptor.
Speaking at the parliamentary banking inquiry, Edwards highlighted the dominance of a “highly profitable” group of incumbent banks, calling it a barrier to real change.
“Kiwibank isn’t going to fix the problem because we’re in a new age of digital engagement and banking services, and we need to be the low-cost operator,” Edwards told interest.co.nz.
NZ trails the world in open banking
Edwards also told MPs that New Zealand lags 15 years behind other countries in adopting open banking. He stressed the importance of capital investment in the fintech sector to drive innovation.
Comparing local fintech Dosh with ASB, Edwards pointed out that Dosh raised $5 million in seed funding in 2021, while ASB CEO Vittoria Shortt received $5.2m in remuneration in the bank’s 2024 financial year.
Dosh’s push for change
Shane Marsh, CEO of Dosh, also presented to the committee, describing the fintech as “building the future of banking in New Zealand.”
Dosh offers a range of services, including current accounts, Visa debit cards, savings accounts, and personal loans.
Marsh said Dosh is seeking Reserve Bank registration, expecting the process to conclude in 2025. While the Reserve Bank requires a $30 million capital minimum, Marsh suggested a lower requirement for Dosh’s low-risk profile, potentially under $5 million.
Commerce Commission’s view on Kiwibank
The Commerce Commission’s 2024 report described Kiwibank as a short-term disruptor with potential to boost competition. “Longer-term, it is through open banking,” said commission chairman John Small.
Finance Minister Nicola Willis has asked Treasury and Kiwi Group Capital to explore options for raising capital to strengthen Kiwibank’s position, with advice due by the end of 2024.
While open banking and fintech innovation offer promise, Edwards maintains that systemic change requires bold action to address entrenched issues in New Zealand’s banking sector, interest.co.nz reported.
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