The government is fast-tracking open banking in New Zealand as part of a broader push for customer choice and market transparency. The Customer and Product Data Act 2025 (CPD Act) will give consumers greater control over their banking data, making it easier to compare services, switch banks, and access better financial products.
The CPD Act received Royal Assent on 29 March 2025. The Government has confirmed that the banking sector will be the first area to come under the new regime, with regulations expected to be finalised well before Christmas and in force by the end of the year.
More than one million New Zealanders already use unregulated open banking services. The Bill will require these services to migrate to a government-regulated system, providing stronger security and consumer protections. Open banking is also expected to increase competition by allowing fintechs and smaller banks to challenge the dominance of the four major banks.
The Government sees open banking as the first step in broader competition law reforms. While banking is the initial focus, the same approach is intended to eventually apply to other sectors where competition is limited, such as electricity, insurance, and telecommunications.
WHAT WILL CHANGE UNDER OPEN BANKING?
Consumers will soon be able to share their financial data securely with third parties, including budgeting apps, lenders, and comparison tools. This is expected to:
- make it easier to compare and switch banking products;
- allow fintechs (companies that rely primarily on technology and cloud services to provide financial services to customers) to provide more tailored financial services; and
- encourage banks to compete on price and service.
With greater data access, strong security measures and consumer protections will be essential. Regulators must ensure banks and third-party providers comply with strict privacy and security standards to maintain trust and enable competition.
HOW DOES THIS IMPACT COMPETITION?
The Commerce Commission’s recent study on banking competition found that the sector is highly profitable but lacks strong competitive forces. The introduction of open banking is designed to:
- reduce banks’ control over consumer data, allowing new players to enter the market;
- give consumers more choice and control over financial services; and
- improve pricing and service quality as banks face increased competition.
WHAT DOES THE CPD ACT MEAN FOR BUSINESSES?
Businesses will need to consider how the CPD Act and open banking (and the later expansion into other areas) may affect their operations. For example, businesses should:
- be ready to take advantage of open banking and later expansions of the CPD Act;
- review any financial tools that may integrate with open banking;
- consider whether it presents opportunities for them to develop or adapt tools that connect with open data systems;
- if applicable as open data rights extend to other industries:
- explore whether there could be opportunities to use consumer data (with consent) for better customer insights; and
- understand whether new compliance and security requirements apply to them.
THE ROAD AHEAD
Open banking is only the start of wider competition law reforms. It will set the stage for similar reforms in other industries, driving greater transparency and customer choice across multiple sectors. Its success will depend on effective implementation and customer adoption, and we look forward to being able to provide our clients with further updates as the “open data right” rolls out in New Zealand.
Please contact us if you would like further guidance on how open banking may affect your business.
