Four New Zealand’s banks are keen for regulatory infrastructure — but they don’t want “regulatory congestion” due to concerns it could cramp innovation in the banking sector.
The topic was discussed by the Chief Executives of ANZ, ASB, Westpac and TSB during a panel at the Payments NZ conference on Tuesday.
ANZ’s CEO Antonia Watson said there was an important trade off between regulation and innovation that needed to be got right.
“We don't want regulation of that innovation but equally we don't want to innovate in a vacuum that isn't safe for customers,” she said.
TSB CEO Kerry Boielle agreed that having a base layer of infrastructure would be helpful as it would enable banks to innovate on top of that.
It would mean banks could spend less time trying to understand what standardisation across the banking sector was or wasn’t going to be implemented over time.
ASB CEO Vittoria Shortt said banks needed regulation that was supportive of what banks are trying to do as this would help avoid “regulatory congestion”.
Westpac CEO Catherine McGrath said many things impacted the payments system for banks all of which caused a “bulge of work”.
“And if you’ve got finite resources, which we do here versus other companies because we're smaller, then it stops your ability either to have too many heads under the hood of the bonnet at the same time, or we don't have enough people with the right skills to do the change,” she said.
“And so having that clear path that says this is what all of you need to line up and deliver year by year by year and we can do it in the right order, would be amazing. I think it would create capacity for us to be innovating more and faster in a way that has been tough to do when you've had a congestion of regulative change.”
Leapfrogging
McGrath also said there were elements of comments made by the Reserve Bank Director of Money and Cash Ian Woolford that were “completely fair”.
Woolford made colourful remarks earlier on Tuesday when he compared NZ’s payments system going from the All Blacks to a runner up in an “inter-club regional rugby contest”.
He said NZ was “far behind” when it comes to progression in payments and the opportunity to “leapfrog” was staring the country in the face.
1 Comments
The bank CEOs are being entirely disingenuous.
Then-Commerce Minister Kris Faafoi sent the bank CEOs a very strongly-worded letter in 2019 telling them to stop dragging their feet and get on with open banking - and in response, they did next to nothing for five long years. That's why open banking in NZ is at least a decade behind the rest of the OECD.
And if banks have to finally invest in some new IT infrastructure, good - they've been penny-pinching and prioritising profits for the last decade instead. Some of the core banking systems date back to the 90s, so it's time they got with the programme, replaced the ancient old mainframes, and started making the investments they've been deferring.
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