RBNZ Study Predicts End to NZ Banking Oligopoly by 2035

The Reserve Bank of New Zealand (RBNZ) has released a study that examines the future of banking in New Zealand by 2035. The Future of Banking Study explores three plausible scenarios for how banking could evolve, and its findings suggest that the current oligopoly profits of major Australian banks in New Zealand may be competed away.

The RBNZ's analysis highlights the potential for change to gain momentum over the next decade, driven by shifting consumer expectations, technological innovation, new competitors, open banking, and policy reforms. The study notes that a wider range of providers may compete or collaborate across the banking value chain, challenging traditional one-stop-shop models.

The RBNZ's scenarios range from continued incumbent-bank dominance to stronger digital challengers and a more diverse, platform-based banking ecosystem. While change could enable better outcomes, such as improved efficiency, choice, access, and productivity, these benefits will depend on consumer trust, resilience, and ongoing investment in system enablers.

The study suggests that the RBNZ may need to dial down its requirements for licensing new digital banks if there is to be any genuine disruption to the monopoly profits of the country's four major banks. This could involve licensing a fintech or a few fintechs to compete with established players.