The Banking Association says there is indeed competition in the market.
A draft report from the Commerce Commission has found a two-tier system divides smaller banks from ANZ, ASB, BNZ, and Westpac, as well as a lack of competition.
It says an apparent focus on profit margins has resulted in under-investment in platforms and low innovation.
It recommends the Government improve capital for Kiwibank and smaller banks.
Banking Association Chief Executive Roger Beaumont told Mike Hosking that the commission also recognised the impact of industry regulation.
He says the regulation banks have been required to do is off the charts and has been a handbrake on innovation.
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