ASB, ANZ chiefs support market study
The Government has asked the Commerce Commission to undertake a market study on the personal banking sector, to ensure that Kiwis are getting “the best deal possible”.
The study will look into competition within the sector, examining barriers to new competitors, the introduction of innovative product and services, along with the ease in which consumers are able to switch banks.
ASB Bank chief executive Vittoria Shortt (pictured above left) said that the bank “welcomes” the announcement around a market study into personal banking services in New Zealand.
Similarly, ANZ CEO Antonia Watson (pictured above right) said that a competition study provided a “good opportunity” to provide facts on what could be a complex area.
In an announcement released on Tuesday, Finance Minister Grant Robertson said that cabinet had agreed to a market study into competition within the banking sector, acknowledging that “Kiwis need to know they can trust their bank with their finances”.
With the cost of living top of mind for New Zealanders, the government wants to ensure there is a competitive market among banks providing personal loans, mortgages, credit cards and other banking services.
“There have been long standing concerns that the market is not working well for New Zealanders. Banks have consistently made high profits over a number of years and their returns have outperformed their peers in other countries,” Robertson said in a statement.
Robertson noted that the four major banks represent around 85% of the mortgage and other lending market and hold 90% share of total banking deposits. Loans by smaller lenders were growing, but “remain small in comparison”, he said.
Commerce and Consumer Minister Duncan Webb said that the market study was the “first step” in understanding banking competition issues.
The Commerce Commission would focus on the following:
- Examining barriers to new competitors entering or expanding in the market.
- The introduction of innovative products and services.
- Consumers’ ability to switch between banks.
- Banks’ profitability and other financial measures to assess competition in the sector.
Profits made by New Zealand banks have been a topic of discussion over recent times, Simplicity managing director Sam Stubbs telling NZ Adviser in March that he would like to see a “proper Commerce Commission enquiry into bank profits”.
Shortt said that ASB was committed to engaging constructively with the Commerce Commission to support the market study process.
“We are very open to discussions on opportunities for improvement within our industry, for the benefit of New Zealanders and the economy,” Shortt said.
“At the same time, the study is an opportunity to demonstrate the value already being delivered to customers across our industry and to give New Zealanders confidence in our banks.”
ASB remains focused on its purpose of accelerating progress for all New Zealanders, Shortt said.
“We will continue to develop and evolve the products and services we offer and to actively support our customers as they navigate the challenging economic environment we are in,” she said.
Watson said that ANZ hoped that the study would improve the level of confidence New Zealanders have in the banking sector.
“New Zealand has a highly competitive banking sector with banks of all sizes and ownership structures, including a government-owned bank,” Watson said.
“However, with cost-of-living pressures rising, it is understandable that reviews such as this take place.”
ANZ was “committed to contributing to the market study” in a proactive and transparent manner, Watson said.
The market study is to be completed by the end of August 2024 and will determine any actions needed to ensure competition is working for bank customers.
The Commerce Commission will release a preliminary issues paper in August, describing the structure of the banking industry and provide early indications on the nature of competition, setting a “clear signal of direction” for the study, Webb said.
Separately, the government is proceeding with work on open banking and establishing a consumer data rights regime and would release a draft Bill for consultation this week.
Webb said that it was important that consumers are able to share their data in a safe and secure manner between trusted providers. The regime would set rules and regulations for providers to follow in handling and securing consumer data, making the sharing “safer, faster and easier”, he said.
