Soon, New Zealanders will enjoy improved access to open banking, but what exactly is open banking and how will it impact your shopping and business practices?
Open banking refers to a secure and shared financial technology infrastructure that enables the safe transfer of financial information using open APIs (Application Programming Interfaces). It establishes a digital platform for securely exchanging information between registered parties.
With open banking, you can conveniently transmit chunks of financial information to businesses or institutions, making transactions faster and easier to complete.
This represents the future of banking in New Zealand, as the government has implemented a consumer rights framework to support open banking, and major banks have embraced this initiative. Open banking is already operational in the UK and Australia, where it has witnessed significant growth.
One example of an existing open banking product is Online EFTPOS, available through the banking apps of the major four banks. This secure online EFTPOS transaction method is favored by merchants due to its prevention of chargebacks and its low transaction costs compared to credit card payments.
Open banking holds immense potential. It is expected to enable various types of low-cost transactions, reducing costs for businesses and offering consumers more payment options. For instance, a comprehensive online wallet is being developed that could eliminate the need for carrying loyalty cards, identification, and proof of address. This will simplify processes such as loan applications, purchasing alcohol, and utilising new financial products. Open banking also serves as an initial step towards a central digital currency that can be stored in your digital wallet.
Furthermore, open banking is likely to stimulate the creation of more apps and services for businesses. This will provide you with options to manage your finances effectively and derive added value and security from your online accounting tools. For instance, you may be able to make direct payments to suppliers, reducing the risk of invoice fraud.
Considering the vast opportunities open banking presents for the fintech industry, we may not be experts in your specific sector, but we’re more than willing to discuss potential opportunities tailored to your industry or business. Feel free to get in touch with us – we’re eager to hear from you.
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