Unlocking open banking benefits
Open banking is set to reshape New Zealand’s financial landscape; here’s what it means, what’s currently available, and how upcoming changes will impact banking for Kiwis, answered by Westpac.
What is open banking?
Open banking is a new system that allows financial apps to securely connect with customers’ bank accounts, but only with customer consent. This means approved businesses can offer services that directly interact with bank accounts, from quick payments to budgeting tools.
“The possibilities are huge,” Westpac said, as third parties and financial tech companies (fintechs) begin to innovate and create new ways for customers to manage their finances.
Are banks developing their own apps?
Currently, no. Banks, including Westpac, are providing secure access to their systems but leaving app development to external companies.
Similar to how Apple’s App Store serves as a platform for third-party apps, banks are opening their systems to approved third parties to build unique financial tools for customers.
Examples of open banking apps in use
Though still new in New Zealand, open banking has already seen some early adopters. Payment providers like BlinkPay, Qippay, and Volley have started offering services powered by open banking.
For instance, Volley enables easy bill-splitting with friends, while BlinkPay is used by Sharesies for instant bank transfers, and Qippay offers a “Pay by Bank” option for online shopping.
What’s next for open banking?
A key feature launching on Nov. 30, will allow apps to access data to provide personalised insights, Westpac reported.
These tools, popular in places like Australia and the UK, will enable budgeting apps and loan application services to securely pull data, simplifying processes like applying for loans and managing multiple bank accounts.
Is data sharing secure?
Yes, open banking is designed for secure, direct data sharing from banks to approved providers.
Unlike past methods, like screen scraping (where users’ bank details are stored to complete a transaction), open banking doesn’t require users to share login details.
Westpac said that while it ensures secure connections with third parties, customers should check providers’ privacy policies for their data protection practices.
Opting out and choosing providers
If you’re not interested in open banking, no problem – existing bank services remain unaffected. However, if you want to explore it, you can find information on verified providers on Westpac’s website or check the API Centre (paymentsnz.co.nz) for an industry-wide list.
How will open banking combat fraud?
While open banking won’t eliminate scams, its secure, direct payment methods reduce the risk of intercepted transactions, Westpac said.
Direct payments mean customers don’t need to exchange bank details, a common method scammers exploit.
Westpac also provides resources to help customers stay safe, available on its Safety and Security page.
Open banking’s future
Westpac and industry leaders are preparing for the November launch, expanding services to offer more choices and convenience to New Zealand customers.
For more information on open banking at Westpac, visit Open banking. (westpac.co.nz), or see Home | API Centre (paymentsnz.co.nz) for an overview of New Zealand’s Open Banking industry.
Read the Westpac insights in full here.
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