The Commerce Commission says a stronger Kiwibank and open banking could shake up the “oligopoly” dominating the New Zealand banking sector. 

The Commission released its final report into competition in the personal banking sector this morning. 

It said a stronger Kiwibank could be a disruptor to the four major retail banks, and open banking could unlock competition and revolutionise choice for Kiwi consumers. 

Key recommendations in its draft report released in March included the Government enabling Kiwibank to grow, the Reserve Bank changing its bank capital rules so small banks could better compete with large banks, and the Government having open banking operational by 2026. 

The Commission said its 14-month study found “a stable, highly profitable, two-tier oligopoly with no disruptive maverick and a lack of obvious or aggressive price competition”. 

Commission chair John Small said recent investigations had reinforced views competition was not working as it should in this sector, and Kiwi consumers were missing out as a result. 

Finance Minister Nicola Willis previously said she was open to diluting the Government’s 100% ownership of Kiwibank to enable it to access more capital. 

The Commission suggested the Government increased Kiwibank’s availability to capitalso it could realistically compete with the big four Australian-owned banks. 

Over the longer term, the competition watchdog wanted open banking to be accelerated, so financial technology firms could provide some banking services. 

Broadly speaking, open banking lets third-party services access banking transactions and data from banks. 

But the Commission appears to have ditched a controversial suggestion in its draft report for the Reserve Bank to change its bank capital rules. 

The central bank voiced strong opposition to changing these rules, aimed at maintaining stability in the financial sector.