Competition advocate and 2degrees founder Tex Edwards says Kiwbank won’t fix competition and profitability issues in New Zealand’s banking sector.
This is despite the Commerce Commission identifying Kiwibank as having disruption potential.
Edwards told the parliamentary banking inquiry on Wednesday there was a “tidal wave of misinformation” about banking in New Zealand, a consequence of the “sheer level of dominance and incumbency by an excruciating profitable group”.
“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,” he said.
The parliamentary banking inquiry is looking at banking profitability and competition in NZ’s banking sector and is made up of MPs from the Finance & Expenditure and Primary Production committees.
Edwards told the MPs NZ was now 15 years behind the rest of the world when it came to open banking.
“Getting capital into the fintech sector is really important,” he said, comparing the salary of ASB CEO Vittoria Shortt with the amount that local fintech Dosh had in capital.
Dosh raised $5 million in seed funding back in 2021 and ASB’s Shortt – who appeared in front of the banking inquiry committee on Wednesday as well – had remuneration of $5.2 million in the bank's 2024 financial year.
The banking inquiry also heard a submission from Dosh on Wednesday where its CEO Shane Marsh told the committees Dosh was “building the future of banking in New Zealand”.
Dosh offers a current account, a Visa debit card, savings account, money management and budgeting accounts, plus personal loans.
The fintech is applying for banking registration from the Reserve Bank which Marsh expects to be concluded in 2025.
The Reserve Bank currently has a $30 million capital minimum for those wanting to gain banking registration.
However, Marsh said Dosh sees itself as a “really low risk entity” and has put forward in its bank registration submission to the Reserve Bank that the capital it needs could be “less than $5 million”.
“It's what is the right number to manage the risk profile of that entity and that will depend on the entity itself,” he told committee members.
Kiwbank is the smallest of New Zealand’s five largest banks and owned by the Government.
It was described by the Commerce Commission as a potential disruptor in the Commerce Commission’s final market study report.
“In the shorter-term, we see the capitalisation of Kiwibank providing the sector with the disruptive maverick that’s currently missing. Longer-term, it is through open banking,” Commission Chairman John Small said when the report was published in August.
In response Finance Minister Nicola Willis asked Treasury to work with Kiwibank’s parent company, Kiwi Group Capital, to provide advice before the end of 2024 on options for raising new capital.
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