CEO Dan Huggins says BNZ wants a 'robust' consumer data right regime standing behind open banking, which offers 'lots of things' beneficial to customers

CEO Dan Huggins says there are benefits for BNZ's customers in the sharing of their data, but care must be taken to avoid it ending up on the dark web, potentially for criminals to exploit.

Speaking to interest.co.nz on Thursday after BNZ posted a 5% fall in interim profit, Huggins noted BNZ has been publicly supportive of open customer data, or open banking.

Of the big banks to date, BNZ has been the most open banking friendly. When Payments NZ, which governs New Zealand’s core payment systems, last year unveiled dates by when the major banks are expected to be ready to allow their customers to share financial data with third parties, it noted BNZ had already met the requirement for the first deadline, at least a year in advance.

Huggins says BNZ is already working with "tens" of fintechs, or financial technology companies, with around 250,000 BNZ customers using the likes of budgeting and reconciliation tools and alternative payment options. Nonetheless Huggins says data sharing needs to be done in the right way.

"You're dealing with very sensitive customer data here, and you need to be careful. You don't want that data ending up on the dark web available for criminals to exploit. So you need to ensure that, firstly, customers remain in control of their data, that they get to choose who it goes to and they get to choose when it stops going to those people."

"Second, you have to have really good security standards, a basic level of security standards and accreditation against those standards to make sure that whoever customers choose to send their data to, that data remains secure. And then third, you've got to have a mechanism where the liability for that data, and the customers understand the liability for that data, passes with the data," says Huggins.

"Once it moves outside the BNZ to another entity, I no longer am able to secure that data. So the liability will therefore follow it."

Therefore a "robust" consumer data right (CDR) regime is required.

"It all comes back to protecting customers' data, which is sensitive data. And what we're ultimately talking about here is sharing that data with other parties," says Huggins.

Customer and Product Data Bill 'as soon as possible'

Speaking in March, Commerce and Consumer Affairs Minister Andrew Bayly said he was expecting to introduce the Customer and Product Data Bill to Parliament, which would establish a CDR, "as soon as possible." Bayly said banking was likely to be the first sector designated under the CDR.

To date BNZ has embraced open banking to a greater extent than ANZ, ASB, Westpac and Kiwibank. Asked why this is the case Huggins says he can't pass comment on what other banks are doing.

"We see ourselves as here to serve our customers, and therefore we'll respond to the demand that we see from customers. And this is one of the areas where we think there's some great customer benefits, and so we've responded accordingly," says Huggins.

"I think there's lots of things that will be beneficial for customers as this is rolled out. And we're seeing that with the customers that are currently using our APIs [ application programming interfaces]. That's, for example, giving the ability for customer data to go into different accounting services to make people's small business accounting much, much easier. That's an awesome benefit for those customers. So we see those opportunities to provide better service to those customers."

'Hundreds of millions of dollars' of technology investment

In the recent draft report from its market study into personal banking competition, the Commerce Commission cited a lack of investment in technology and innovation across the major banks. The Commission said this "sustained lack of major investment" is consistent with weak competition over an extended time period.

Huggins says BNZ is "investing hundreds of millions of dollars a year" in its technology systems.

"We're continuing to do that. I expect that we [will] keep on doing that moving forward for certainly the foreseeable future, and that's resulting in us having good underlying systems that are serving customers brilliantly. Is there opportunity to continue to improve them as technology continues to evolve? One hundred percent, but we're going to keep on doing that," says Huggins.

Among other things, the Commission's draft report recommends the Government sets clear deadlines and works with the banking industry to ensure open banking is fully operational by June 2026. The final report is due out in August, which will then be considered by Bayly.

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