Speaker 1: Open banking is here, or at least the first real
Speaker 1: version of it, with New Zealand's four biggest banks and
Speaker 1: zed ASB B and Z and Westpac now required to
Speaker 1: share the customer's data with trusted third parties with the
Speaker 1: customer's authorization.
Speaker 2: Of course, it promises to open up innovation in everything
Speaker 2: from faster, more convenient retail and e commerce payments to
Speaker 2: new budgeting and investment apps.
Speaker 1: It could take a lot of hassle out of the
Speaker 1: process of applying for a loan or mortgage, but.
Speaker 2: Will open banking really unlock the competition our highly concentrated
Speaker 2: and vastly profitable banking sector needs.
Speaker 1: This week on the Business of Tech powered by two
Speaker 1: Degrees Business, we took to two entrepreneurs on the frontlines
Speaker 1: of open banking, hoping to take advantage of regulatory changes
Speaker 1: to increase choice and competition in financial services.
Speaker 3: And the UK, it took a while for uptake off
Speaker 3: the open banking regime and certainly the same in Australia.
Speaker 3: I think New Zealand's going to be much faster. The
Speaker 3: customer product data built was really well designed and an
Speaker 3: our view as a stands today is going to be great.
Speaker 4: Eventually woman that was comin foundation later that everyone can
Speaker 4: build upon and you can start thinking about, well, what
Speaker 4: of the care you make the lines that could really
Speaker 4: generate value, Like we're actually solving a problem that's value where.
Speaker 5: People are willing to pay for more on open banking.
Speaker 2: Coming up with our featured guests Blink Pays, Adrian Smith
Speaker 2: and AKA Who's Josh Daniel shortly, but.
Speaker 1: First we look at some of the big tech stories
Speaker 1: making headlines this week, and we start with Harold Tech
Speaker 1: editor Chris Keel's Tech Insider piece very interesting about Soul
Speaker 1: Machines are really promising, New Zealand's startup founded by Greg
Speaker 1: Cross and Mark Sagar. And just as a bit of background,
Speaker 1: Soul Machines came up with what they call it a
Speaker 1: digital brain. This was Mark Saga who came out of
Speaker 1: where a digital So the idea was to take this
Speaker 1: incredible intelligence they created and use it to feed digital
Speaker 1: avatars that could have really sensible conversations in a customer
Speaker 1: service context. So we saw a lot of pilot projects
Speaker 1: pop up with the likes of A and Z and
Speaker 1: Mercedes bend And in New Zealand, and it appears as
Speaker 1: though both those founders, Greg cross Mark Sager are actually
Speaker 1: gone from Soul Machines.
Speaker 2: Bin Yeah, operationally and the directorship. They've both stepped back.
Speaker 2: They're on an advisory role now, whatever you want to
Speaker 2: make of that. If you are adjacent to the industry
Speaker 2: as we are, you're kind of would have been hearing
Speaker 2: these rumblings around Soul Machines for some time now that
Speaker 2: it seems to have been struggling to find its feet
Speaker 2: in the new world of AI. And that's kind of
Speaker 2: what Chris Keel's story goes into the details of what
Speaker 2: actually seems to have happened there. The question is that
Speaker 2: people are asking is whether they were kind of disrupted
Speaker 2: by generative AI, or whether they the tech was actually
Speaker 2: more flash than bang, whether it actually seemed like it
Speaker 2: was going to be really valuable to a lot of
Speaker 2: consumers but ultimately just wasn't really what people were looking
Speaker 2: for or weren't ready for.
Speaker 1: Perhaps, and I was sort of expecting by now we
Speaker 1: would be interacting with these digital avatars which you can
Speaker 1: actually see rather than just talk to, like Siri or Alexa.
Speaker 1: I thought they'd be everywhere now, but they're not. And
Speaker 1: in the intervening few years since Solar Machines really got
Speaker 1: going on these digital avatars. We've seen the rise of
Speaker 1: generative AI, which Solar Machines has embraced. So they are
Speaker 1: using chat GPT to power some of their sort of
Speaker 1: off the shelf bots that you can buy relatively cheaply
Speaker 1: to run your customer service. The big question mark is
Speaker 1: over the digital brain technology. Is it too expensive, is
Speaker 1: it too cumbersome to use? Is it actually still valuable?
Speaker 1: And it may well be, but so Machines appear to
Speaker 1: be running out of money. You wrote a story this
Speaker 1: week looking at the financial statements. They've got cash and
Speaker 1: TERMB deposits of twelve point three million dollars with net
Speaker 1: cash outflows of thirty eight point one million for the
Speaker 1: year ending March thirty one.
Speaker 2: Yeah, that was last year, twenty twenty three, So that
Speaker 2: was what they had then and it's been twelve months
Speaker 2: since then. That that's probably why they've reduced their head
Speaker 2: count from two hundred and fifty three to seventy in
Speaker 2: that time.
Speaker 1: And we haven't heard anything about a significant new injection
Speaker 1: of funding, have we?
Speaker 5: No?
Speaker 2: No, And again in that in Chris Kill's article he
Speaker 2: talks about them potentially it looks like they've tried to
Speaker 2: whether that was not as successful as they hoped, or
Speaker 2: whether they couldn't quite get that off the ground, it's
Speaker 2: not really obvious to us what actually happened. So yeah,
Speaker 2: keeping an eye on things, and hopefully we'll hear something
Speaker 2: a little more detailed from either the company's new CEO
Speaker 2: or somebody soon, because they're keeping their cards very close
Speaker 2: to their chest at the moment.
Speaker 1: I'd love to see this company really succeed in its
Speaker 1: original mission, which sounded fantastic and drew on some great technology,
Speaker 1: and they've put a lot of work into this all
Speaker 1: the way since twenty sixteen, I think when they set
Speaker 1: out on this venture. But is this unfortunately going to
Speaker 1: be a victim of this disruptive generative AI revolution where
Speaker 1: things that were very expensive and complex to create with
Speaker 1: suddenly with natural language processing and large language models and
Speaker 1: training those models, you can arrive at something as good
Speaker 1: for a fraction of the price. That's the concern.
Speaker 2: You also have to look at just the cost to
Speaker 2: open AI of training those models. It's billions of dollars,
Speaker 2: and did zull Machine ever have those kinds of Microsoft
Speaker 2: level pockets to be able to do something that would
Speaker 2: ever challenge that level. They didn't really, but yeah, it
Speaker 2: is difficult to know how big the general audience is
Speaker 2: for face to face chatbots. Like I struggle to see
Speaker 2: the value. And I was speaking to a former podcast guest,
Speaker 2: Tim Warren the other day about this, and one of
Speaker 2: the things he said to me, it's difficult when you're
Speaker 2: facing a generation that doesn't even want to pick up
Speaker 2: the phone and have a call to try and convince
Speaker 2: them to have conversations with digital people.
Speaker 1: Yeah. And we were at an event with the Amazon
Speaker 1: Australia New Zealand people last week and I was asking
Speaker 1: one of them when to Genai sort of coming to
Speaker 1: the Alexa, and they said, it is coming, you know,
Speaker 1: watch out, it's not far away. So that will be
Speaker 1: the big test. I think at the moment they're not
Speaker 1: very useful those voice assistants really for anything other than
Speaker 1: asking what the weather is or what's in my calendar.
Speaker 1: But if they can use those large language models to
Speaker 1: deliver much more lifelike and an intuitive answers to less
Speaker 1: structured questions, that will be a game changer. But do
Speaker 1: I need a digital representation of a person on a
Speaker 1: screen fronting that for me personally. No, maybe millennials and
Speaker 1: gen z don't give us stuff about that. They just
Speaker 1: want to get a really good answer to their question,
Speaker 1: and if it's speaking into their phone, they're happy to
Speaker 1: do it.
Speaker 5: Yeah.
Speaker 2: And the other thing I guess is that you know,
Speaker 2: there was a lot of hype for the metaverse that
Speaker 2: some machines tried to ride there for a while, but
Speaker 2: unfortunately that was a hype train without rails and didn't
Speaker 2: gat very far.
Speaker 1: Yeah. Looking a bit more broadly at AI, interesting report
Speaker 1: from Judith Collin's office as the Minister of Science, Technology
Speaker 1: and Innovation starting to give us a little bit of
Speaker 1: an idea as to where she is directing the government
Speaker 1: to take artificial intelligence, both from a regulation point of view,
Speaker 1: but also trying to promote update offen.
Speaker 2: Yeah, they proactively released a cabinet paper that Judith Collins
Speaker 2: submitted basically talking about how she wants to try and
Speaker 2: get New Zealand using AI. A big part of it
Speaker 2: for the private industry is that she they basically want
Speaker 2: to say, don't be stressed about future regulations.
Speaker 5: You can go and start playing now.
Speaker 2: We're going to take a light touch regulation and if
Speaker 2: anything crops up outside of the current legal frameworks.
Speaker 5: Then we'll address that when it happens.
Speaker 2: So maybe that will have the intended effect and get
Speaker 2: people a little bit more excited to dive in and
Speaker 2: use it. I don't know if anybody was sitting there
Speaker 2: with their finger hovering over a button just waiting for
Speaker 2: the regulatory nod from government or not, but maybe they were.
Speaker 1: So this really carries on to theme I think from
Speaker 1: the National Party and then with Judith Collins as sort
Speaker 1: of Technology Minister and really passionate about AI light touch,
Speaker 1: risk based approach to AIG, which is what the EU
Speaker 1: has done, but what will happen here nowhere near is prescriptive?
Speaker 1: That makes sense to me, but there's just a lot
Speaker 1: of gray areas in our privacy law and our copyright law,
Speaker 1: and what she's basically saying is where existing legislation can
Speaker 1: deal with this, we will build on that if things
Speaker 1: need to be tweaked, but we're not really looking at
Speaker 1: a whole new regime which some countries and the European
Speaker 1: Union have actually gone and introduced. So she's signaling very
Speaker 1: much we're not going to be as heavy handed on that.
Speaker 1: I guess the other thing the paper flags is a
Speaker 1: role for GCD government chief Digital Officer who we had
Speaker 1: on the show back last year. Paul James is in
Speaker 1: that role at the moment. She's basically signaling to that office,
Speaker 1: we need to get the ball rolling here. You're going
Speaker 1: to coordinate things across government when it comes to the
Speaker 1: uptake of AI.
Speaker 4: Yep.
Speaker 2: She refers to strong leadership as needed, and I guess
Speaker 2: she is putting her faith in Paul James to be
Speaker 2: that strong leader and to maybe establish a strong leadership
Speaker 2: team as well hopefully that can get together and do this.
Speaker 2: She wants to get all the different portfolios to basically
Speaker 2: come back and offer some ideas about how they could
Speaker 2: potentially use artificial intelligence to improve the public services that
Speaker 2: they offer, and then put those together and create a
Speaker 2: cross portfolio working group headed by the Chief Digital Officer
Speaker 2: to start getting that together basically to start thinking about
Speaker 2: how they could possibly integrate some AI to improve public services.
Speaker 2: So it's a start, you know, it is a start,
Speaker 2: and hopefully it doesn't end up in bureaucratic quagmire.
Speaker 1: Yeah, relatively little in there about how to really jump
Speaker 1: start use of AI across the economy in a private sector.
Speaker 1: I think they just haven't really got to grips with
Speaker 1: how sort of mb AS, the agency responsible for that
Speaker 1: sort of stuff, would go about it. Other countries have
Speaker 1: set up, for instance, the National Center for AI and
Speaker 1: Australia to really push that along. The UK is going
Speaker 1: big on that, as is the us SO question Mike
Speaker 1: over that, particularly when we don't really have a strong
Speaker 1: digital strategy at the moment. There is other stuff that
Speaker 1: is happening that is useful. The AI Forum put out
Speaker 1: their Blueprint for AI in r Tauro last week, so
Speaker 1: I think that's good and they suggested a handful of
Speaker 1: industries we should really focus on for AI. So and
Speaker 1: maybe that's the more appropriate place for that to come from,
Speaker 1: which is them to tell government, if you really want
Speaker 1: to help us, this is the areas you should focus on.
Speaker 1: Another interesting report out last week from the Institute of
Speaker 1: Directors really useful guide for governing AI boards and business
Speaker 1: leaders actually incorporating it into their existing frameworks for governance
Speaker 1: rather than trying to create a whole new one. So
Speaker 1: there's pragmatic stuff. There's a lot of good stuff actually
Speaker 1: happening in New Zealand. It's probably not happening quickly enough.
Speaker 1: To enable what we need to make the most of
Speaker 1: this technology. But in some ways it's good that we're
Speaker 1: just not under public pressure or some need to do
Speaker 1: something jumping straight to regulation that may not be fit
Speaker 1: for purpose down to track.
Speaker 5: Yeah it's a slow start, but it's a start.
Speaker 1: Now. Open banking quietly arrived officially on May thirty, with
Speaker 1: our four big banks now required to run secure channels
Speaker 1: to third parties such as FinTechs and online retailers, allowing
Speaker 1: customer account and transaction data to be shared.
Speaker 2: It's a real milestone for the fintech sector, which is
Speaker 2: looking at the huge profitability of our big banks and
Speaker 2: seeing ample scope. It takes some market share, if not
Speaker 2: in the core business of taking deposits and issuing loans,
Speaker 2: at least in the financial services that wrap around the banks,
Speaker 2: such as online payments.
Speaker 1: We've been slow to join the open banking party. Other
Speaker 1: countries are frankly way ahead, but finally been we seem
Speaker 1: to have progress on open banking APIs or application programming interfaces,
Speaker 1: with the Big four playing ball and Kiwi Bank also
Speaker 1: set to join the open banking regime from twenty twenty six.
Speaker 5: Yeah, it's coming.
Speaker 2: It's finally kind of here in a way, it's really
Speaker 2: relying on the Consumer Product Bill which was recently read
Speaker 2: before it actually gets into force legislatively. But Payments in
Speaker 2: New Zealand and its API center have actually been doing
Speaker 2: quite a good job at pushing ahead with the kind
Speaker 2: of with the legislation there in the in the background,
Speaker 2: saying it's coming, so let's get working on it now.
Speaker 2: And they're the ones that have set these timeframes just
Speaker 2: for the big four banks moment, but they do have
Speaker 2: about a ninety five percent share of the market in
Speaker 2: New Zealand, so it's pretty pretty dominant anyway.
Speaker 1: So take us through this ben there are a whole
Speaker 1: bunch of startups out there that are just chomping at
Speaker 1: the bit to get hold of customer data from banks
Speaker 1: in an accessible format that allows them to do what exactly.
Speaker 1: What are some of these companies and what are the
Speaker 1: sorts of services they're looking to jump on the open
Speaker 1: banking bandwagon to deliver to kiwis.
Speaker 2: You've got the likes of blink pay, who we're going
Speaker 2: to speak to Adrian Smith shortly from blink pay quick Pay.
Speaker 2: They similar to blink pay, where they are a payments provider,
Speaker 2: so they can allow merchants to quickly and easily take
Speaker 2: payments directly from people's bank accounts using an API. You've
Speaker 2: got the likes of Akoho, So they're open banking, but
Speaker 2: they are actually not actually using APIs at the moment.
Speaker 2: You'll hear a bit about that from Josh Daniel in
Speaker 2: the conversation. They use an older form of open banking
Speaker 2: called screen scraping, which is a little bit controversial. And
Speaker 2: then you've got the likes of Pocketsmith. They help with budgeting.
Speaker 2: They provide you with insight into your bank accounts so
Speaker 2: you can see you where your money's being spent, and
Speaker 2: you can set budgets for things and do all kinds
Speaker 2: of clever stuff. So while it sounds kind of boring
Speaker 2: and dull and kind of like what's the point of
Speaker 2: it all, the reality is is that the banks have
Speaker 2: a huge amount of your data. This is data that
Speaker 2: is about you, about the stuff that you have been
Speaker 2: spending money on.
Speaker 1: We've sort of got Stockholm syndrome. I think in New Zealand.
Speaker 1: We've been told that, you know, you need to have
Speaker 1: a stable banking system, so they cane us on fees,
Speaker 1: but at least it's a stable system and your bank
Speaker 1: isn't going to collapse and take all your money. But
Speaker 1: the consequence of that is we just haven't seen the
Speaker 1: innovation in new services. It's not until you go to
Speaker 1: Singapore or China or even a UK and you go,
Speaker 1: my god, look at the diversity of players. They are
Speaker 1: bigger markets, but just the sorts of services that they're
Speaker 1: offering a lot of them at based, very accessible convenience
Speaker 1: services that we just don't really have here. And I
Speaker 1: think that's when people realize, wow, we're so far behind
Speaker 1: in New Zealand. We were ahead with f poss and
Speaker 1: that in the eighties, but we have slipped behind. So
Speaker 1: that's what we definitely need to address. That's what the
Speaker 1: legislation is aimed at. So here's Ben's interview with a
Speaker 1: car who's Josh Daniel and Blink Pays Adrian Smith. Who
Speaker 1: are really going to articulate for us exactly what the
Speaker 1: promises of open banking.
Speaker 2: Kyodo, Hello, welcome to the Business of Tech Josh and Adrian.
Speaker 5: How's it going well, Kyoder?
Speaker 2: Very good, good, Thank you so much for joining us.
Speaker 2: So you guys are both on the third party provider side,
Speaker 2: of this open banking progression that we've been slowly pushing
Speaker 2: towards over the last several years. So do you want
Speaker 2: to just very quickly give us a quick bit of
Speaker 2: information about what your companies do, Adrian, Oh.
Speaker 4: Yeah, absolutely, So blink pay we position ourselves as a
Speaker 4: paytech because that was the first thing that has been
Speaker 4: building open banking standards in the payment initiation APIs. But
Speaker 4: now the account information APIs are coming along, we're going
Speaker 4: to be repositioning ourselves as an integration player. And last
Speaker 4: so not too the similar to the work that are
Speaker 4: coding with Josh and Josh ok.
Speaker 3: Yeah. So Kahu is an open finance intermediary. We focus
Speaker 3: our work on the New Zealand market only, so we
Speaker 3: provide data integrations with New Zealand banks and other financial
Speaker 3: service providers. So what we do is enable people building
Speaker 3: consumer products to use a single API for access to
Speaker 3: those data integrations. And then there are other parts of
Speaker 3: our service that do things like transaction and Richmond other
Speaker 3: things like that that we think that at the Ushalaya.
Speaker 2: Cool, thanks so much. So API actually is what we're
Speaker 2: going to be starting a conversation with. So the technically
Speaker 2: it stands for Application Programming Interface, I believe. But what
Speaker 2: that basically means is it's a piece of software that
Speaker 2: allows two different pieces of software to.
Speaker 5: Share data kind of freely.
Speaker 2: That's an oversimplification obviously, but that's kind of been the
Speaker 2: main focus, I guess in recent times for open banking.
Speaker 2: On May thirty we saw one standard come in for APIs.
Speaker 2: We've got another one coming in November. So the May
Speaker 2: thirty one was about payments. So what has that offered
Speaker 2: in terms of capability for people who can plug into
Speaker 2: those APIs.
Speaker 4: Yes. So one of the really cool things about the
Speaker 4: Open Banking Paymentiation APIs is if you're connected to a
Speaker 4: third party, like a payment gateway, you can enable your
Speaker 4: customers to pay directly buy from their own bank accounts
Speaker 4: and you know, as an alternative means to using cards
Speaker 4: to make those payments in the e commerce space. And
Speaker 4: as a consequence, because we're going outside of the card
Speaker 4: scheme rails, the cost profile is materially lower than if
Speaker 4: you're going by the card schemes. And I'm sure we
Speaker 4: all recently saw that paper from ComCom that highlighted that
Speaker 4: Bees and MasterCard charge about ninety five billion annually in
Speaker 4: card payments and for the tune of about a billion
Speaker 4: dollars in fees. So the open banking standard and the
Speaker 4: fee structures with the banks are materially lower than that,
Speaker 4: and so we have the opportunity and ability to offer
Speaker 4: the everyday kiwis in New Zealanders a lower price point
Speaker 4: in order to process payments and not go into debt
Speaker 4: for that.
Speaker 5: Got cha, Josh, anything to add to that.
Speaker 3: I guess just to set the scene a little more,
Speaker 3: a car who operates with unregulated forms of open banking
Speaker 3: for the last three and a half years. We launched
Speaker 3: because we felt that the regulation was coming soon and
Speaker 3: it's taken longer than we expected. But the idea was,
Speaker 3: let's get things moving and evolve into the purpose built
Speaker 3: regulation which looks like is coming in New Zealand. So
Speaker 3: what we do is provide data and payment connectivity. And
Speaker 3: we have over fifty customers that made from governments, corporates
Speaker 3: to FinTechs, and that's a range of enduring data consents,
Speaker 3: one off data consents, and enduring payment consents. The only
Speaker 3: thing we don't do is a one off payment consent.
Speaker 3: So this first release on the thirtieth of May from
Speaker 3: the Big four Banks is a one off payment consent API,
Speaker 3: which is the only functionality that we don't provide, So
Speaker 3: this first release wasn't relevant to us that looking a
Speaker 3: head to the next release on thirtieth November, which was
Speaker 3: a one off and enduring data consent API, that is
Speaker 3: where for the Big four banks, their first release will
Speaker 3: enable functionality for we think at least six of our
Speaker 3: customers depending on what gets delivered in that release, out
Speaker 3: of the optional functionality.
Speaker 2: So what does that mean the data that it's going
Speaker 2: to be accessible? What is this transaction data that's supposedly
Speaker 2: so useful?
Speaker 3: So I think that the canonical example in New Zealand
Speaker 3: is zero, where if you use zero, you want your
Speaker 3: transaction data to be hooked up into the accounting software
Speaker 3: and you don't want to manually import it each time
Speaker 3: you want to do bank reconciliation and zero. So there's
Speaker 3: a whole lot of dasy use cases like that where
Speaker 3: you as a consumer might want to grant access to
Speaker 3: some third party service. So some of the common ones
Speaker 3: are budgeting tools. So if you allow your data to
Speaker 3: automatically flow in, a historical budget can be automatically generated
Speaker 3: and then you can extrapolate that forward to make budgeting
Speaker 3: more accessible and easier to tract to. You could do
Speaker 3: nit worth tracking, which basically aggregates the balances of your
Speaker 3: financial accounts and allows you to see that high level
Speaker 3: view of how you're tracking over time accounting and text
Speaker 3: as a really common one. One that's been in the
Speaker 3: news recently is Prosaic, which has a tool for business
Speaker 3: owners to find tax deductible expenses and then make it
Speaker 3: easier to similar to claim to IID. So all of
Speaker 3: these use cases require financial data. That's the customer's data,
Speaker 3: and what open banking does is make it autable or
Speaker 3: easily portable. And that could be a one off access
Speaker 3: to a third party, or it could be an ongoing
Speaker 3: access which people are familiar with from accounting software or
Speaker 3: personal finance software.
Speaker 2: So that's kind of where we're at. But I think
Speaker 2: it's also worth mentioning that this is only for the
Speaker 2: big four.
Speaker 5: Banks at the moment.
Speaker 2: There are many banks across New Zealand, although I think
Speaker 2: it's what is it, ninety five percent of the population
Speaker 2: are covered by those big four, so it's a big swath.
Speaker 2: But then we're also seeing some laggards and I guess. Also,
Speaker 2: the question is with these API timeframes that we've got
Speaker 2: May and then November and then maybe another six months
Speaker 2: or the next one, is that getting us where we
Speaker 2: need to be quick enough is leaving provision for other
Speaker 2: banks to kind of slowly catch up. Does that make
Speaker 2: sense as well?
Speaker 4: So the big four banks, depending on your definition, they
Speaker 4: have anywhere from eighty five to ninety percent of the
Speaker 4: bank to New Zealand populace. And from our perspective, for
Speaker 4: any network to work and feed on through the platform revolution,
Speaker 4: it's all our network effects. And in our case in
Speaker 4: New Zealand, ninety nine percent of New Zealand is a bank.
Speaker 4: And so for a network to really take off, obviously
Speaker 4: having the full major banks is a really good starting point.
Speaker 4: But actually we want everyone to be included and involved,
Speaker 4: right because the value of a network comes from its participants.
Speaker 4: So I remember when I was at university, I was
Speaker 4: one of the first mugs to get a mobile phone
Speaker 4: and have I guess how many people like a call?
Speaker 4: No one, I was the only one, so that netwok
Speaker 4: wasn't worth crack then, But then fast forwards, today everyone's
Speaker 4: in a smartphone, right, so the more people on the network,
Speaker 4: the more valuable it becomes. And so for us, that's
Speaker 4: a pretty interesting point. And I think the other really
Speaker 4: interesting point around major banks and sort of the other
Speaker 4: banks and laggards is one of the really interesting things
Speaker 4: that we've observed in the Zealand context is all it
Speaker 4: takes for one major provider API provider to not want
Speaker 4: to participate and it can nobble the whole thing because
Speaker 4: when you go out and you speak to in our
Speaker 4: case we're B to B two C, so we're other businesses.
Speaker 4: We talk to them, we saill say, hey, this new thing,
Speaker 4: it's magic du du da and they say, oh, well
Speaker 4: call us from the Big four on and you're like, ah, okay,
Speaker 4: well we're trying. And so that's part of the challenge
Speaker 4: is that's the first objection always raised ball us in
Speaker 4: the Big four on right, because as a business you
Speaker 4: can understand the perspective. I don't want to have to
Speaker 4: only get a partial solution if I'm going to commit
Speaker 4: time of resources to a thing.
Speaker 3: I think we need to acknowledge that in the current environment,
Speaker 3: there is nothing compelling the banks to offer API services
Speaker 3: to third parties. It is voluntary, and there is regulation
Speaker 3: coming that will compel data holders to provide these services,
Speaker 3: but at the moment there is nothing. So if we
Speaker 3: waited for the slowest bank to be part of this,
Speaker 3: it just wouldn't happen until there is regulation. So if
Speaker 3: you think about this from a consumer's perspective, the upgrade
Speaker 3: that is coming from these purpose built APIs. The main
Speaker 3: upgrade is that you can authenticate directly with your bank
Speaker 3: and grant the consent there rather than doing that authentication
Speaker 3: via a third party. And so we don't actually need
Speaker 3: all the banks to have these services available to start
Speaker 3: getting the benefits. Even if one bank is ready and
Speaker 3: you can switch that customer across to the purpose built API,
Speaker 3: those customers of that bank will have a better experience.
Speaker 3: So we can do this on a bank by bank basis,
Speaker 3: and for each bank integration you just upgrade to the
Speaker 3: best API that is available, so it makes it okay
Speaker 3: to do this in an editative way. I think the
Speaker 3: thing we need to be in mind, though, is that
Speaker 3: the functionality that these APIs do can only deliver to
Speaker 3: so many use cases, and so we shouldn't expect this
Speaker 3: thirty May release in the standing November release to change
Speaker 3: the world because the functionality that's available is not at
Speaker 3: parasy with what's a market already. So there are some
Speaker 3: use cases that will not be able to migrate, yet
Speaker 3: they will come at a later stage when iterations on
Speaker 3: those APIs have been delivered. So we always try to
Speaker 3: just be sober about expectations because we can't expect a
Speaker 3: whole lot to take off if the APIs themselves can't
Speaker 3: deliver everything that's in market already.
Speaker 4: Yeah. So if I could just respond to that and
Speaker 4: challenge that the statement of the wouldn't happen, which is
Speaker 4: a bit of an absolute statement, because I'm happy to
Speaker 4: report that as of this afternoon we signed the last
Speaker 4: of the big four major banks.
Speaker 2: Congratulations on the commercial agreement.
Speaker 4: Yeah. So there's a scuttle but that it requires regulation
Speaker 4: to get this done, and that's how it worked in
Speaker 4: the other jurisdictions I know where I did this. In
Speaker 4: the UK, the regulator says, you nine go together, play nice.
Speaker 4: If you don't, we'll beach out. Okay, fine, And so
Speaker 4: it's been different not having that regulatory stick to move
Speaker 4: every and along. So, as Josh alluded to, right, there's
Speaker 4: going to be folks in the caravan to move slower
Speaker 4: than others, and if you're trying to do it together,
Speaker 4: it's pretty hard to do it if they are slower members.
Speaker 4: But what I would say at all that, though, is
Speaker 4: we got there without the regulatory stick. It may not
Speaker 4: as been as quicker or as easy it would have liked,
Speaker 4: but we've got them there.
Speaker 5: I mean, yes, you did in a way.
Speaker 2: But I would say that the banks have known that
Speaker 2: there was the regulatory stick hovering just out of frame
Speaker 2: for some time. So while that the stick wasn't necessarily
Speaker 2: descending fast, it definitely may have been in their peripheral.
Speaker 4: Oh absolutely, And I'm pretty certain that's what's managed because
Speaker 4: like the thirty may date, setting that to the side,
Speaker 4: like as a thing, what it did was it meant
Speaker 4: the four major banks all arrived at that date pretty
Speaker 4: much at the same time. So one of the reasons
Speaker 4: why we've been pretty quiet the last six seven weeks
Speaker 4: is because we've been doing four integrations and four commercial negotiations.
Speaker 4: It's been quite the to do. But having that line
Speaker 4: in the sand caused a reaction and a response which
Speaker 4: has actually been I think going to be net beneficial
Speaker 4: once everyone starts to join in and get involved.
Speaker 2: Now so does that make you then does that make
Speaker 2: Blink Pay the first third party outside of Worldline, which
Speaker 2: has had them for some time to have API agreements
Speaker 2: with all four of the big banks.
Speaker 4: Yes, that's correct. Although what I would say though, is
Speaker 4: in this scenario, Worldline are the to AKNA and the
Speaker 4: to a kind of ten relation, we are the juniors,
Speaker 4: like Full Credit. They spent seven or eight years getting
Speaker 4: the four major banks right, and I can understand the
Speaker 4: concern of hey, this is this is ever going to happen,
Speaker 4: and so we've got them there in three and so
Speaker 4: we feel very fortunate to have done so, and we
Speaker 4: think because of industry efforts as well as regularly oversight,
Speaker 4: even though there hasn't been a really hard push, that's
Speaker 4: allowed us to get there at less than half the
Speaker 4: time that wild One got there.
Speaker 2: Great, let's talk a little bit now about I guess
Speaker 2: what you referred to before, Josh as a unregulated open banking,
Speaker 2: and I think the common parlance for it is screen scraping, right,
Speaker 2: which is where you have a tool that can access
Speaker 2: a bank account on behalf of a customer, and it
Speaker 2: can read the information on that online banking and then
Speaker 2: make changes et cetera, et cetera. The benefits that are
Speaker 2: from that, and it's something that was talked a little
Speaker 2: bit about in the Australian Open Banking Palava, which will
Speaker 2: cover shortly, but it is that it's it's free, There
Speaker 2: are no transaction fees, no any other kind of fees
Speaker 2: that go.
Speaker 5: With it, and it seems to work.
Speaker 2: And there is a conversation maybe about how secure it
Speaker 2: actually is, but there have been people have pointed out
Speaker 2: there have been no major breaches due to screen scraping,
Speaker 2: So why then do we need APIs if we have
Speaker 2: a functional, serviceable approach.
Speaker 3: Now, yeah, it's a good question, and I guess to
Speaker 3: give context to the uptake.
Speaker 4: You know, in New.
Speaker 3: Zealand there are more than a million kiwis that would
Speaker 3: use in a form of unregulated open banking or screen
Speaker 3: scraping process in a product every year, and it's similar
Speaker 3: in other countries where there are products that use those processes.
Speaker 3: The major drawbacks of the current methods is that, first
Speaker 3: of all, to create the connection between bank account and
Speaker 3: the third party service, you have to share your log
Speaker 3: in credentials with a third party and that is clearly suboptimal.
Speaker 3: You shouldn't have to do that in order to create
Speaker 3: the connection, so that is the major upgrade. The second
Speaker 3: important point is that with purpose built APIs you can
Speaker 3: clearly define the scope of access that you want to
Speaker 3: share with a third party. So those are two upgrades
Speaker 3: we're going to get from purpose built APIs through the
Speaker 3: regulatory regime or voluntary APIs that become available. But I
Speaker 3: do think it is an autumn like this whole open
Speaker 3: banking regulation movement has come about because of all of
Speaker 3: the other forms of open banking that have had products
Speaker 3: built on them for the last twenty years. So without
Speaker 3: Mint dot Com in the US, without Zero and New Zealand,
Speaker 3: without a clear show of consumer demand, we wouldn't have
Speaker 3: had this move towards open banking regulation. And the way
Speaker 3: I see it, like obviously all this current activity should
Speaker 3: have migrate into the regulated system when it can, but
Speaker 3: we do need to make the most of what has
Speaker 3: been done to date to see what functionality there is
Speaker 3: demand for and it use as a benchmark for whether
Speaker 3: the regulated system is at parracy or doing the job
Speaker 3: it needs to. In Australia, there's been a whole lot
Speaker 3: of recent debate brought on by an Australian Banking Association
Speaker 3: study about what has happened in Australian's version of regulated
Speaker 3: open banking and the uptake over there, and the uptake
Speaker 3: there hasn't been great. There hasn't been a lot of
Speaker 3: migration from the unregulated forms into the regulated system, and
Speaker 3: we want to avoid that in New Zealand. We want
Speaker 3: to make sure that our regulated system is designed so
Speaker 3: that it is compelling to use that system instead, so
Speaker 3: that those consumer benefits are it.
Speaker 2: So how do we do that, agrim maybe you went
Speaker 2: away in here. How do we make it so that
Speaker 2: a system that is essentially more expensive becomes more attractive?
Speaker 4: We'll see the level of expense isn't actually been determined
Speaker 4: because the access to the data action function. None of
Speaker 4: the major banks have actually set the stall out around pricing,
Speaker 4: and so as a precedent when the UK did open banking,
Speaker 4: the bank's aid all the costs. Because let's think about
Speaker 4: this logically, underneath the customer product Data bill and the
Speaker 4: consumer data right whereby this is my data? Like, are
Speaker 4: you going to charge me to access my data?
Speaker 1: Huh?
Speaker 4: That doesn't seem to stack up logically, and so I'd
Speaker 4: be curious to see which way Minister Bailey and NBG
Speaker 4: with all of this in terms of any cost profile,
Speaker 4: because suddenly you've got your cost to get your data
Speaker 4: from banking and then electricity and then telco and the
Speaker 4: insurance and everyone who gets designated, and you then run
Speaker 4: into the issues of the quality right and ten tility
Speaker 4: Like if there'll be some socioeconomic groups I'm Maldy, so
Speaker 4: I'm gonna be quite sympathetic who may not be able
Speaker 4: to access their own data because they can't afford it.
Speaker 4: So there's some social economic issues that play there and
Speaker 4: titility issues. But coming back to the question around kind
Speaker 4: of how do we get this to work? I think
Speaker 4: one of the challenges we have we've seen the screen scraping,
Speaker 4: and this is part of my previous experience in another
Speaker 4: world in the UK is I would be at a
Speaker 4: big major bank and i would see a screen scraper
Speaker 4: come in and then I'd see all of the audit
Speaker 4: logs just delete it and I'd have no idea what
Speaker 4: they did. Clueless, I was like, what the hell has
Speaker 4: happened here? And I would then look at it and like, well,
Speaker 4: I don't know what the permitted purpose was, but the
Speaker 4: amount of data that's been sort of deleted from our
Speaker 4: logs suggested they've gone way beyond what was the original
Speaker 4: permissions and authorizations for that. And so that kind of
Speaker 4: stuff really gave me a difficult sense of can I
Speaker 4: can I get comfortable with this? And so I spoke to
Speaker 4: some of these young bankcine this happened in Britain. Do
Speaker 4: you guys have that have it today? I? Oh, why
Speaker 4: don't we talk about that? And there's various reasons and
Speaker 4: logical other banks don't talk about that. So there are
Speaker 4: aspects of that. And so for me, it's analogous to like, Okay,
Speaker 4: I've just met you, here's the key to my house.
Speaker 4: You're going to do that one thing and then lock up.
Speaker 4: But then I don't know if they're rummaging through my
Speaker 4: drawls and such. So I just can't get comfortable that
Speaker 4: kind of as as an approach. And so and then
Speaker 4: there's the other issue right where okay, then the regulated
Speaker 4: version of things, the bank has to keep the consent
Speaker 4: and you need to be no, no, what is the
Speaker 4: concent this transparency of what it's for for how long?
Speaker 4: What purpose? And you can go edit or a ment
Speaker 4: or delete the consent at the bank or at the
Speaker 4: third party within the screen scraping process, it'll be down
Speaker 4: to the third party alone for that consent. And then
Speaker 4: I don't know how many people actually know what they've
Speaker 4: signed up to where they can go to don any
Speaker 4: of the things that the CPD bill is going to
Speaker 4: bring in.
Speaker 2: So should there be an attempt to regulate out screen
Speaker 2: scraping once we do get the regulation come in around
Speaker 2: data sharing?
Speaker 4: View? Right, I keep on talking about an orderly exodus
Speaker 4: screen scrapping. To Josh's point, right, there are certain capabilities
Speaker 4: in market today that is superior to what the standards
Speaker 4: bringing in initially. And as the saying goes right, necissity
Speaker 4: is the mother of invention, and the fact that a
Speaker 4: million keys have engaged with these services suggests that there's
Speaker 4: demand for it. There's linked to demand. Well, there's actual
Speaker 4: demand for that. And so to Josh's point, which I
Speaker 4: agree with, it's like, well, we can't just cut them off,
Speaker 4: but we need to find some way to say, Look,
Speaker 4: as we've got secure and stable and supporting methods that
Speaker 4: allow people to access these data services in order to
Speaker 4: do really cool things to help them be better off,
Speaker 4: we then need to unwind the other things that aretas
Speaker 4: stable and un and secure. So I guess that's my
Speaker 4: view on that is, if we could have an exit
Speaker 4: from the unsupported sort of means to do the supported means,
Speaker 4: they'd be really good because I think I don't know
Speaker 4: if you unsaw the first three of the CPD bill
Speaker 4: where Minister Bailey spoke around banks have to get better
Speaker 4: at making sure there's no impersonated access people coming in
Speaker 4: and doing stuff like that seemed like a pretty strong
Speaker 4: signal that he's putting up he's sending out a caller
Speaker 4: cutting off to the screen scrapers that he's going to
Speaker 4: do something about or he's going to get someone else
Speaker 4: do something about that soon.
Speaker 2: Yeah, and how does that sit with you, Josh, being
Speaker 2: you know, as you have relied on these Owen regulated
Speaker 2: methods for some time.
Speaker 3: Look, we'd love to use purpose built APIs instead, and
Speaker 3: the sooner that can happen, the better. So we support
Speaker 3: the Customer Product Data Bill that Adri mentioned before, which
Speaker 3: is the Consumer Data Right regime that New Zealand is developing.
Speaker 3: We offered to banks to build APIs for them so
Speaker 3: that they could do authentication in their own environment. We
Speaker 3: do everything we can to bring about this world faster.
Speaker 3: So yes, we definitely support that, but in my view,
Speaker 3: we need to keep the market pressure to show demand
Speaker 3: and it's incumbent on the data holders to come up
Speaker 3: to speed with where the market's at rather than lose
Speaker 3: the innovation and competition that has been driven by the
Speaker 3: market over the last twenty years. So yep, I'm up
Speaker 3: for an orderly transition at the right time and light
Speaker 3: with the iterative approach to rolling out purpose built APIs.
Speaker 3: It should walk hand in hand with that because more
Speaker 3: and more use cases should be able to transition as
Speaker 3: new iterations of the APIs are rolled out. You know,
Speaker 3: in the UK it took a while for uptake of
Speaker 3: the open banking regime and certainly the same in Australia.
Speaker 3: I think New Zealand's going to be much faster for
Speaker 3: a couple of reasons. One is that we've got both
Speaker 3: read and write access probably in scope from day one,
Speaker 3: which is for example, not the case in Australia where
Speaker 3: it's just read access. And the second major one is
Speaker 3: that the Customer Product Data bill is really well designed.
Speaker 3: We truly have taken the lessons from the UK and
Speaker 3: Australia and other developing regimes around the world, and an
Speaker 3: argue that consumer Data Right regime in New Zealand as
Speaker 3: a stands today, it's going to be great. We're excited
Speaker 3: to use it and we think we'll bet be able
Speaker 3: to migrate a lot of our traffic early on, which
Speaker 3: will show success in the early years, which is what
Speaker 3: we really want. We need to make the cost benefit
Speaker 3: of this regulation worth it, and we think there is
Speaker 3: a good chance of that at the New Zealand region.
Speaker 2: One kind of trump card that some people like to
Speaker 2: pull out quite often is like mortgages. You know, the
Speaker 2: open banking comes up and they go but mortgages, and
Speaker 2: expect people to go, yeah, you're right, let's forget open banking.
Speaker 2: Maybe maybe I'm exaggerating, but the argument is that you know,
Speaker 2: people have mortgages with their banks, that this makes them
Speaker 2: really sticky, so open banking isn't going to increase competition anyway,
Speaker 2: and that mortgages are actually the key fundamental profit center
Speaker 2: for financial services. So financial service like you guys, you
Speaker 2: know you're not actually going to be able to make
Speaker 2: any money from what you're doing. I compete with the
Speaker 2: banks in the future do you want to kind of
Speaker 2: talk to a little bit about the influence of mortgages
Speaker 2: of this, the power they have over consumers, and the
Speaker 2: whether that is a fair statement.
Speaker 3: Yeah, so yeah. I think there are a few things
Speaker 3: in there, and one that I'd like to seize out
Speaker 3: is this idea around bank switching, and I think a
Speaker 3: lot of people conflate bank switching with open banking. I
Speaker 3: think a lot of people get ideas around bank switching
Speaker 3: from the talco industry, where the idea is you really
Speaker 3: only want one number. Banking is different. It's okay to
Speaker 3: have ten accounts, and if you move to a new
Speaker 3: financial product at a different provider, it's okay to leave
Speaker 3: your transactional banking with the provider you're already with. When
Speaker 3: it comes to mortgages, one of the things that's been
Speaker 3: happening over the last decade in New Zealand is an
Speaker 3: increase in proportion of mortgages that are originated via brokers,
Speaker 3: and as that has increased to now more than sixty percent,
Speaker 3: there's an increased likelihood that the customer will switch the
Speaker 3: provider of that home line because they're less weirdded to
Speaker 3: just signing up with whatever is offered by the bank
Speaker 3: that they mostly interact with. So if we just really
Speaker 3: quickly go through how homeland process looks for an applicant
Speaker 3: right now, most people on average are going to a
Speaker 3: broken so they'll have a discussion. They'll be sent a
Speaker 3: link to use screen scraping to simplify the application process
Speaker 3: and fetch or clase all the financial data for the application.
Speaker 3: The broker will then assess it, provide some advice if
Speaker 3: the applicant wants to. That broker will then send out
Speaker 3: that financial data, usually over email, to a bunch of lenders.
Speaker 3: People on the other end will get that data. They'll
Speaker 3: spend hours going through it, come up with a view
Speaker 3: on yes no. Here are the terms of yes, back
Speaker 3: through the broker and back to the applicant. So with
Speaker 3: open banking, it definitely improves that it should be more
Speaker 3: secure and easier for the applicant to do the application form,
Speaker 3: it should be easier for the broker to digitally interact
Speaker 3: with the lenders, and the lenders should be getting machine
Speaker 3: readable data that they can then process automatically or at
Speaker 3: least more automatically than they currently do. Along that whole chain,
Speaker 3: there are improvements that open banking should bring to make
Speaker 3: the whole process of refinancing you're playing for a loan
Speaker 3: easier for an applicant, which should and decrease the inertia
Speaker 3: of movement.
Speaker 2: So it's not just then it's a little bit more
Speaker 2: complicated than saying, well, people have their mortgages with X bank.
Speaker 2: You know, your point is that under open banking that
Speaker 2: actually becomes a lot more fluid that yes, they might
Speaker 2: have a mortgage with the bank, but by being able
Speaker 2: to kind of have a service that will say, hey,
Speaker 2: you've got your mortgage with this bank, do you want
Speaker 2: us to check around and see what else there is,
Speaker 2: that could start to actually increase competition and put pressure
Speaker 2: on the market.
Speaker 3: That's exactly right. And so if you're able to port
Speaker 3: your data to another provider and say what can you
Speaker 3: do for me, and that's a simple process, then you
Speaker 3: should be able to switch products easily. Does it mean
Speaker 3: you need to switch banks or wherever you have your
Speaker 3: payment set up or wherever you receive your income. It's
Speaker 3: the other products that may be more important, and it
Speaker 3: should be easy to compare and switch those.
Speaker 2: And what about the idea of profitability that you know,
Speaker 2: mortgages are the only way really that banks make most
Speaker 2: of their money, and that offering financial services that don't
Speaker 2: include hefty amounts of interest on loans isn't going to
Speaker 2: be a profitable future for a company agent.
Speaker 4: The way banking works apologies that I'm teaching you on
Speaker 4: a stuck eggsit right is banks are really preoccupied with
Speaker 4: net interest marginal nimbs and so you know, quick explainer,
Speaker 4: deposit in, give you tiny bit of interest, lend it out,
Speaker 4: charge a lot of interest, and neet the difference net
Speaker 4: interest margins. That's what they do and that's been the
Speaker 4: banking model for hundreds of years. And when you look
Speaker 4: at the New Zealand banks, you see that typically the
Speaker 4: retail banks have a n them of about two point one percent.
Speaker 4: Some of the clever ones have taken very particular views
Speaker 4: on markets, like for instance, Heartland's net interests manage about
Speaker 4: eight percent. But that's what they're doing. That's what they
Speaker 4: used to. They used to making money off of interest,
Speaker 4: and then they used to they also make money for
Speaker 4: things like a fees and charges. And when I was
Speaker 4: at Barkleys, we used to refer to that as like
Speaker 4: bad income. We didn't want to make money from overdraft
Speaker 4: charges and unplaned overdrafts and interest on all of that
Speaker 4: sort of stuff. And so whilst banks still make moneys
Speaker 4: in those ways and that's still the most profitable path
Speaker 4: to banking, there's still opportunity though, because as we are
Speaker 4: all aware right, last year the New Zealand banks that
Speaker 4: are owned by Australia there was about seven point two
Speaker 4: billion New Zealand dollars in profits, So there's, you know,
Speaker 4: there's a pretty sizable pie out there. There's things that
Speaker 4: can be done over and above just interest generated from
Speaker 4: mortgage accounts. And as we're all aware right, if you're
Speaker 4: getting in deposits into your bank accounts that you're giving
Speaker 4: tiny interest on, those are the most cheapest forms of
Speaker 4: capital and the world, which is why banks are very
Speaker 4: keen for you to put money and deposit your salary
Speaker 4: into their bank. So you have these tier one banks
Speaker 4: who have a slightly insolent advantage of this size and scale,
Speaker 4: which is hard to replicate if you don't have the
Speaker 4: size and scale. But having settled that, there are other
Speaker 4: ways to generate income if you can create value added
Speaker 4: services that you can charge for. So one of the
Speaker 4: things we're really excited about within the open banking regime
Speaker 4: and APIs is the stuff we do at the moment
Speaker 4: is foundational stuff. But eventually, when we've got this common
Speaker 4: foundational layer that everyone can build upon, then you can
Speaker 4: start to think about, well, what are the premium APIs
Speaker 4: the kind of proprietary, bespoke things that Josh is talking
Speaker 4: about that could then really generate value, like we're actually
Speaker 4: solving a problem that's valuable that people are willing to
Speaker 4: pay for. And so one of the things around the
Speaker 4: mortgage example is and this is something that Minister Bailey
Speaker 4: called out earlier on this week, is in Australia you
Speaker 4: can get a mortgage and they basically as part of
Speaker 4: that process they then access with your consent or your ID,
Speaker 4: they then access your primary account. They then run a
Speaker 4: full bity assessments on everything in there, they get all
Speaker 4: transactional industry they need in order to then arrive at
Speaker 4: a lending decision in minutes. And so that's the kind
Speaker 4: of premium API you know from banking will eventually unlock
Speaker 4: file toy and all. And I'm here for that. Let's go.
Speaker 2: I mean I think as well, it's worth noting that
Speaker 2: a UK fintech Revolute. They just got approved as a
Speaker 2: bank in the UK, I think it was as of
Speaker 2: today or yesterday, and they were hundreds of millions of
Speaker 2: dollars a year in profit and they haven't got mortgages yet,
Speaker 2: so you know, I think there is a piece of
Speaker 2: evidence there that we can point to.
Speaker 5: That's our time.
Speaker 2: Unfortunately, I could talk about open banking for hours, but
Speaker 2: we do have to wrap up. So thank you so
Speaker 2: much to Josh and Adrian for joining us and giving
Speaker 2: us a bit of insight into what's going on leisure.
Speaker 3: Thanks foraming us.
Speaker 4: Yeah, absolutely, I reckon we could have gone on for
Speaker 4: another couple of hours because I don't know if you've urdosed,
Speaker 4: but Josh and I have some fairly pointed views, not
Speaker 4: always aligned, but at least we're in the tent trying
Speaker 4: to do something, unlike others who are outside the tent
Speaker 4: lobbing stones and name names. But part of the reason
Speaker 4: why the CPD bill is so important is the recent
Speaker 4: data breach by Squirrell says, Hey, this is why this
Speaker 4: stuff's important, guys, Let's get some regulation in it.
Speaker 1: So Ben, A big takeaway for me from that discussion
Speaker 1: is the existing banking system when it comes to mortgages,
Speaker 1: which you asked about. You know, I sort of thought,
Speaker 1: you know, when you get a mortgage that sort of
Speaker 1: locks you into a bank, and then you do your
Speaker 1: savings and maybe your shared trading, and that's through your
Speaker 1: bank because it's the most efficient way to do it.
Speaker 1: But the reality is is that mortgage brokers account for
Speaker 1: something like sixty percent of what new mortgages signed. So
Speaker 1: there's this whole layer of third parties that are interacting
Speaker 1: with the banks and the ability for them to gain
Speaker 1: access to your transaction history, your account information massively going
Speaker 1: to speed up that process. And then if you can
Speaker 1: put that information into hand of financial advisors as well,
Speaker 1: and maybe the rise of robo advice, which is feared
Speaker 1: by artificial intelligence, suddenly you've got a lot of kiwis
Speaker 1: who may see a lot of benefit and dealing with
Speaker 1: third parties and allowing the financial data to be existed.
Speaker 2: Yeah, you know, we are talking about a country in
Speaker 2: which there was a whole generation or two who when
Speaker 2: they turned to certain age asb rolled up to their
Speaker 2: school and said that no, give us five bucks and
Speaker 2: we'll start you a bank account, and they never bothered
Speaker 2: to change like that. I mean that was a massively
Speaker 2: successful campaign for them. I was one of those kids,
Speaker 2: and it was only by dint of my restlessness that
Speaker 2: I think that I ended up leaving ASB.
Speaker 5: I went to National Bank.
Speaker 2: National Bank got eaten up by A and Z and
Speaker 2: I wanted to not be with an Australian bank basically,
Speaker 2: so I left again. Like you say, this lock in
Speaker 2: that we have, this inertia that we have to moving
Speaker 2: about is real. But with a tool like this, and
Speaker 2: with an increasingly digitally savvy population, we can start to
Speaker 2: see things become easy. I always talk about the benefit
Speaker 2: of user interface and user experience. If you can make
Speaker 2: something easy for people, that is when you start to
Speaker 2: see drastic change. That's what the iPhone was all about.
Speaker 2: That's what Zero is all about. It's what all of
Speaker 2: these amazing companies have been all about. And I truly
Speaker 2: think that with the advent of these APIs, with these
Speaker 2: really forward thinking FinTechs who are on the cutting edge
Speaker 2: of technology and really agile and able to make things
Speaker 2: work for their audiences, I truly think that as long
Speaker 2: as things are accessible and affordable, it will start to
Speaker 2: see some drastic change that will create a more equal
Speaker 2: playing field of people, will give people better budgeting tools,
Speaker 2: will give people better access to lending that is less
Speaker 2: predatory because they may not just google personal loan and
Speaker 2: go with the first person and that pops up. That's
Speaker 2: my hope, Like, that's what I would like to think anyway,
Speaker 2: and I.
Speaker 5: Think that you know that.
Speaker 2: Hopefully Adrian and Josh would agree with me, but there
Speaker 2: are probably a.
Speaker 5: Lot of people who would disagree with me.
Speaker 1: What does it mean? They talked about read access as
Speaker 1: well as right access, and this includes right access which
Speaker 1: apparently the Australian regime doesn't. So presumably read ACXISS means
Speaker 1: you can look at account information and transaction history and
Speaker 1: that sort of thing. Does writing it mean that you
Speaker 1: can do something in say a dash app or something
Speaker 1: like that, and then that's reflected back in someone's bank
Speaker 1: account with one of the Big four.
Speaker 2: Yeah, they can kind of, I guess, make transactions on
Speaker 2: your behalf using your bank account, which could be good
Speaker 2: for your budgeting apps, right, because if you want to
Speaker 2: pocketsmith or something that is able to read all of
Speaker 2: your transaction data and say, don't let me spend more
Speaker 2: than fifteen bucks a week on coffee or at cafes
Speaker 2: and then you your pocket Smith card. But that's you
Speaker 2: don't have to worry about topping up a wallet into
Speaker 2: Pocketsmith to actually enact that. It can all be kind
Speaker 2: of done more simply.
Speaker 1: That's great, and I could see it eventually super wraps
Speaker 1: emerging for financial services where they become the interface for
Speaker 1: my chers e's, my bank account, my hatch, whatever else
Speaker 1: I'm using, and I do it all through one interface
Speaker 1: rather than going to separate apps, and maybe it gives
Speaker 1: me some intelligence around what is my overall financial health
Speaker 1: or investment health looking at, rather than having to go
Speaker 1: from chers E's to ASB to what's my key we
Speaker 1: savior doing. Having all of that in one place that
Speaker 1: would be really powerful.
Speaker 2: Yeah. Basically anything you do with a spreadsheet like is
Speaker 2: what you can hopefully get automated with open banking.
Speaker 5: That's kind of how I like to think of it.
Speaker 1: Yeah, and these two guys seem really upbeat about this.
Speaker 1: It's not like what happened in Australia.
Speaker 4: You know.
Speaker 1: They say that we've learned from that. We've got quite
Speaker 1: an effective regime that's been outlined here. So they seem
Speaker 1: quite upbeat on what the prospects are over the coming
Speaker 1: years for open banking in New Zealand.
Speaker 2: Yeah, I think everybody is pretty upbeat about it. Like
Speaker 2: if you go to the Customer and Product Data Bill
Speaker 2: first reading the transcript and so you look at the
Speaker 2: Andrew Bellies comment and he says, the question is who
Speaker 2: supports the bill? Well, honestly basically everyone, which I think.
Speaker 5: Is really true.
Speaker 2: You scroll down and you've got Labor, Greens, Acts to
Speaker 2: Party Maori that're all supportive of this bill. And although
Speaker 2: you know it's a different extent and with different perspectives
Speaker 2: around competition and about data sovereignty and all these kinds
Speaker 2: of things, they all recognize that enabling consumers to have
Speaker 2: access and control of their own data is going to
Speaker 2: be a net good at the end of the day.
Speaker 1: Great bring it on and good luck to blink, pay
Speaker 1: a carhoo dash all of them. Because we do know
Speaker 1: already that the fintech sector is a big revenue spinner
Speaker 1: and most of that is probably zero is counted and that,
Speaker 1: but this is a big sector, you know, best part
Speaker 1: of a billion dollars already. And as those two guests
Speaker 1: pointed out, banking is seriously profitable in New Zealand, so
Speaker 1: there is market share to be claimed there, there are
Speaker 1: fees to be taken out of the system and lowered,
Speaker 1: so it's not as though they're cannibalizing and in dussery
Speaker 1: that's doing it tough. You know, there's a lot of
Speaker 1: fat there to be eaten away, so credit to them.
Speaker 1: That's where innovation and disruption will really come into its own.
Speaker 5: Absolutely.
Speaker 2: Yep. Well that's it for the Business of Tech this week.
Speaker 2: Thank you to Adrian Smith from blink pay and Josh
Speaker 2: Daniel from Alcohou for filling us in on the practicalities
Speaker 2: and potential of open banking.
Speaker 5: We'll keep a close eye on that sector as the
Speaker 5: regime develops.
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Speaker 2: You can email me Ben at business apps dot co
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