Banking has come a long way in harnessing digital technologies to improve customer experiences, but manual processes have continued to cause friction. That looks set to change with the acceleration of open banking, which allows New Zealanders to easily and securely share their banking data with organisations they trust.

An initiative led by Payments NZ, open banking enables participating banks such as Westpac to give approved third-party service providers standardised access to payment and data-sharing technology, with the customer’s consent. This allows customers to consent to one-off or ongoing payments directly from their bank account, or securely share their account information, such as their transactional account history for home loan applications.

How will open banking improve the customer experience and benefit SMEs? Dan Symons, senior manager of consulting and insights at Westpac New Zealand, shares his perspective.

How is Westpac implementing open banking in New Zealand?

We are improving the payment capability of one-off and ongoing payments from bank accounts and delivering on account data capability, which will be extended to include statements and account details such as name, address and phone number, in November this year.

We are also waiting on more details relating to New Zealand’s consumer data right law, so we can prepare for the industry transition to a regulatory-led model.

How does open banking benefit Westpac customers, especially SMEs, and improve the customer experience?

The current focus is aimed at how SMEs can help their customers, predominantly in an e-commerce experience. For example, open banking provides a new payment option for customers to pay directly from their bank account, which can help reduce costs such as surcharges, compliance costs and risks relative to other payment methods, like storing card data. This also increases inclusion for those who don’t want to or can’t pay using scheme cards.

It can also remove the need for customers to make manual internet banking payments to SMEs, allowing them to reconcile payments more efficiently.

Customers also won’t have to leave digital environments to undertake manual processes to share banking information with SMEs, which vastly improves their experience.

How is customer data protected?

Trust and security are non-negotiable aspects of open banking. Customers are directed to their bank’s internet banking platform to view, authorise and manage data sharing and payments. As a result, the security is bank grade. Also, all third parties are accredited by the banks to ensure they meet a specified standard.

Are there any challenges associated with open banking?

One big challenge is the adoption of open banking. It’s important for customers to be aware and have trust in using the service. Businesses that are using the open banking capability are critical to this, given they are where customers’ open banking journey begins.

How do you see open banking transforming the banking landscape in New Zealand over the next five years?

Customers will have new and improved financial services, more options in terms of pricing and, where data is required, improved experiences in non-financial services as well. They will be able to better realise the value of their data and will have more control over it.

How can SMEs leverage open banking to better manage cash flow or access financing?

SMEs will have better insights around cash, liquidity and treasury management – including multi-bank overviews. They can also use open banking data to increase the personalisation and speed of lending outcomes. As the ecosystem matures, businesses will also be able to access open banking to upload their transaction information or make payments to their bank account directly from their accounting platform.

Find out more

Contact Westpac New Zealand via our website to register your interest in open banking.