Open finance is foreign to many New Zealanders. Many are not aware of its benefits, much less its existence. However, a Financial Technology (FinTech) study revealed open finance is tipped to become the standard for consumers’ financial welfare and empowerment.
Government-backed non-profit industry group FinTechNZ affirms such developments. Its Executive Director Jason Roberts says the huge opportunities for Kiwi businesses and consumers simply can’t be ignored; with open finance set to increase competition and innovation across many sectors.
We are in the perfect position, with open finance in its infancy, to leverage this technology to help contribute to reducing financial exclusion and lay down the foundations for a strong digital economy.
– Jason Roberts, Executive Director, FinTechNZ
The benefits are enormous. Open finance, if done right, provides an enormous opportunity to address inequities, both now and in the foreseeable future, helping Kiwis better manage their finances, Roberts affirmed.
Moreover, he expounded that emerging FinTech like open finance is redefining the way we borrow, lend, save, spend, store and transfer money. Disruptive technologies are revolutionising traditional financial services, creating new services for consumers and opportunities for start-up entrepreneurs and corporate innovators, he added.
FinTechNZ, part of the NZ Tech Alliance, is at the forefront of all of this. The not-for-profit group brings together New Zealand financial service providers, tech innovators, investor groups, government regulators and financial educators.
Simply put, open finance is FinTech giving individuals and business entities more power when it comes to handling their finances. It means they will be able to access and use any financial data supplied by them or created on their behalf by their provider, be that a bank, insurance company, utility or any firm that holds their financial transaction data.
With open finance, account holders will have:
- Better access to cheaper and more holistic debt advice
- Better access to product recommendations
- increased engagement with their financial situation.
These are just three ways in which Personal Finance Management platforms (PFM) could evolve in open finance. To date, countries like the U.S. and Brazil have been systematically applying open banking concepts.
Wellington is well aware of these developments. Already, the open finance research report will be launched by David Clark, the Digital Economy Minister David Clark. However, the technology is not as popular as prime movers would hope. There is a low level of awareness and understanding in New Zealand about open finance and the benefits it offers. The research shows this needs to be improved.
The good news is the private sector is leading the way. A handful of Aotearoa’s most successful international FinTech companies are already leading the way, the research report detailed.As with the case of any emerging ICT, open finance can only thrive when regulation allows it to. It’s critically important, therefore, that New Zealand’s FinTech ecosystem is set on a foundation of trust, clear rules around liability, terms of access and privacy, technical standards and collaboration with the government.
New Zealand’s digital transformation is evolving at seemingly breakneck speeds. That Wellington invested in a global marketing campaign to highlight its technology sector is proof of that. It definitely knows how much its economy can be moved with digital adoption.
Still, it has to move with a lot of caution. While the benefits of open banking can be manifold, the technology could be the target of unscrupulous entities willing to take advantage of new technology. The recent case of cyberattacks in the health sector during the pandemic is a reminder of that, as reported on OpenGov Asia.