Labour proposes reforms to increase competition in banking sector

The Labour Party has pledged to make it easier for new competitors to challenge New Zealand's major banks. The party's policy aims to remove barriers for fintechs and smaller banks to provide market access. This includes proposing new digital bank licences to allow payments companies to develop into digital banks.

Labour's plan includes a requirement for a real-time payments system that operates 24 hours a day, seven days a week by 2030. The party also intends to introduce a new e-money licence for businesses offering services such as digital wallets and payments. Additionally, the party promises to make it easier for fintechs to use government digital identity tools for customer onboarding.

Labour leader Chris Hipkins stated, "Four big banks dominate our banking sector. When there isn’t enough competition, customers have less choice and banks have less reason to offer them a better deal". Commerce spokesperson Arena Williams said the major banks hold approximately 85-90% of registered bank assets.

The party's approach focuses on open banking and digital identity tools rather than major structural reforms, such as the NZ First proposal to merge BNZ with Kiwibank. A 2024 Commerce Commission study found that ANZ, ASB, BNZ, and Westpac did not face strong competition and maintained high profitability.

Where reports differ

• Report 1 notes that the policy does not include major structural reforms like the NZ First proposal to merge BNZ and Kiwibank.

Compiled from reports by The Post and NZ Herald.