Nicola Willis: Finance Minister on her plan to inject competition into the banking sector

The Finance Minister aims to put an end to the 'cosy pillow fight' between banks and bolster sector competition.

A Commerce Commission report has found that the four big Australian-owned banks are turning high profits, far out-stripping international peers.

The Commission has recommends open banking practices and tweaks to Reserve Bank rules to ease access for small players.

Finance Minister Nicola Willis says she's exploring options to raise Kiwibank's capital. 

"I think Kiwibank needs to remain New Zealand's bank - and exactly how that's defined is one of the questions that's to be discussed during this process."

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Episode Transcript

Speaker 1 (00:00):
Good afternoon. The Finance Minister has declared war on what
she calls the cozy pillow fights between the big four banks.
The Commus Commission released its banking study today. It made
fourteen recommendations to beef up competition, including capitalizing Kiwibank, introducing
open banking, cracking down on mortgage advisors, and the Finance Minister,
Nicola Willis is with us.

Speaker 2 (00:19):
Now, Hey, Nikolin, good afternoon.

Speaker 1 (00:21):
You have it on Kiwibank. How are you going to
capitalize it? Are you going to do a partial float
so anyone can buy in?

Speaker 2 (00:27):
What I've done is I've asked Treasury to work with
Kiwi Group Capital that's the current company of Kiwibank, and
to give me advice before the end of the year
on options for raising new capital. So that could include
keep we saver funds, investment funds, investments from everyday New Zealanders.
They'll come up with options, Cabinet will consider those options
and we'll progress from there.

Speaker 1 (00:47):
Are you committed to one hundred percent Keiwi ownership.

Speaker 2 (00:51):
I think Kiwibank needs to remain New Zealand's bank and
exactly how that defines. As one of the questions that
need to be discussed during this process.

Speaker 1 (01:00):
Why would mum and dad investors put money into key
We Bank if they can't sell it to just anyone
when they're ready to sell it.

Speaker 2 (01:07):
Well, what I know is that a lot of the
key we Save are funds out there are looking for
valent based investments, and you're right, I'll want to invest
in it if it's profitable, if they think that it's
got the opportunity for growth and to deliver a return
to their investors. So one of the steps that the
Treasury will need to go through in the next couple
of months is to talk with those potential investors about

(01:29):
the turns on which they would want to invest and
you'll write, some of them may say, look, in order
to invest, I want the opportunity down the track of
seeing a listing occur. So those are all things that
will need to be taken into consideration and CANET will
deliberate on Okay.

Speaker 1 (01:45):
On open banking, does this actually work? It's been hyped,
but the Aussies reckon it just cost them one point
five billion dollars and didn't really do anything for consumers.

Speaker 2 (01:54):
Well, I'm much more optimistic about open banking because what
it means is you can have a financial service provider
who provides you one part of the banking offering. So
it just might be your current account, it might be
your foreign exchange, it might be your loan, and that
they can use your data in order to do that.
And the reason I feel optimistic about it is I

(02:16):
want New Zealanders to shop around a bit more because
one of the big conclusions of this report is that
most New Zealanders just don't switch bank, which allows the
banks to lean back and be pretty content that once
they've nabbed a customer, they're a customer for life. Well,
I like the idea of little minnows coming in and saying, hey,
I can do that for you cheaper, faster, better, And

(02:37):
that's what open banking allows for. And we've actually got
to make sure that the banks give that data away
so the innovators can come in and think up some
imaginative ways of doing things.

Speaker 1 (02:47):
What's the problem with the mortgage advisors?

Speaker 2 (02:50):
I look the comments Commission, I looked at this in
some detail. They basically say a lot of mortgage advisors
have agreements with the banks about up how much business
style flows through there. Sometimes you might not know it,
but your mortgage advisor doesn't even have a deal with
one of the banks, so you're only seeing offers from
two or three banks, not all of them. So I

(03:13):
think this is an area that the Cinential Markets Authority
looks over and we want to get the balanced right.
You don't want to tie up the mortgage advisors and
so much red tape that they can't do their job.
But equally, if you're going to a mortgage advisor, you
want to know that they are giving you the most
tuned up to deal possible. And again this is where
open deck tin comes in because if they can access

(03:35):
the dark ware and I only put in one application
and everyone's looking on the same page, makes it simpler
to care off.

Speaker 1 (03:41):
Of listen, would you put your money where your mouth is?
And when the Westpac banking contract that you've got the
government has got comes up in twenty twenty seven and
if Kiwi Bank is ready, would you put your banking
with them?

Speaker 2 (03:52):
Well, it's really important when the government does procurement, it
doesn't fame the one provider over another. So I'd expect
que to put their best foot forward and whether or
not they would win the tender would depend on who
was going to provide the best value for money contract
for the government contract.

Speaker 1 (04:10):
All Right, Nicola, thank you for your time. Appreciate it.
This Nicola willis the Finance Minister.

Speaker 2 (04:13):
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Speaker 1 (04:16):
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