Welcome the destination, contest the pace
New Zealand’s four major banks have done everything right on paper. They have welcomed the Commerce Commission’s guidance shortening the hybrid period between old and new payment systems. They have built standardised APIs. They have expressed support for open banking in principle.
What they have not done is commit to a date for turning off the legacy access methods that keep the old system running alongside the new one. That gap between enthusiasm and execution is where the real story sits.
The Government agreed in August 2024 that open banking should be fully operational by June 2026. The Commerce Commission’s March 2026 open letter set a softer version of the same target, stating it expected “the bulk of sub-optimal access to transition to bank APIs by the end of 2026 for large banks.” The operative word is “expect.” The regulator can nudge. It cannot compel.
The numbers look good until you read the fine print
The Commerce Commission’s December 2024 retail payments update is the most granular public data on where things stand. At least 15% of eligible customers at each major bank have made an open banking payment via API, a figure that exceeds comparable adoption rates in Australia and the UK at similar stages.
That sounds encouraging. But it was not until October 2024 that the first third party was simultaneously connected to all four banks’ APIs. Only BNZ was open for partnering with multiple third parties before the regulatory deadline pushed it. And the 15% figure measures payment initiation only, not the full account data portability that would let SMEs shop their transaction history to competing lenders.
The Commission itself flagged ongoing concerns about bank API pricing and the need for an orderly transition. Meanwhile, Payments NZ and MBIE have pushed back against characterisations of a “significant disconnect” in progress. Their position is that the transition is proceeding adequately. ComCom’s own concerns suggest otherwise.
A two-tier oligopoly protecting its margins
None of this is happening in a vacuum. The Commerce Commission’s 2024 market study found New Zealand has a “two-tier oligopoly” in retail banking, with ANZ, ASB, BNZ and Westpac holding 85-90% of total retail banking assets.
Commerce Commission chair John Small put it plainly: “In a well-functioning market with strong competition, we’d expect to see more aggressive strategies to win customers from other banks. What we see in New Zealand is that the major banks have little strategic differentiation, and their growth targets focus on maintaining market share and protecting margins and profitability.”
Open banking is supposed to be the crowbar that loosens that grip. But the NZBA’s August 2025 submission on the exposure draft of open banking regulations reveals the industry’s preferred tempo. The banking lobby welcomed the opportunity to engage, expressed support in principle, then complained that the two-week consultation period was insufficient and advocated for a “longer consultation period and more measured, well-sequenced approach.”
Support the destination, contest the pace. Every request for more time is another month of protected margin.
Six years of glacial progress
This is not a new pattern. As the NZ Herald reported, then-Commerce Minister Kris Faafoi expressed frustration with banks’ “uncertain and slow” progress on open banking back in 2019. Five years later, industry commentator Ernie Newman noted that progress was still “glacial”, drawing an explicit parallel to telecommunications, where number portability faced identical incumbent resistance before regulation forced the issue.
The Customer and Product Data Act received Royal Assent in December 2024, formally designating the four majors as the first participants subject to open banking obligations from 1 December 2025. Kiwibank follows on a phased schedule, with payment initiation from 1 June 2026. The legislation is real. But legislation without binding transition deadlines and enforceable consequences is a framework, not a forcing function.
What SMEs lose while the clock runs
For business owners, the stakes are not abstract. Without full API-based data portability, an SME cannot walk into a challenger bank or fintech lender with its complete transaction history and negotiate a better rate. Product roadmaps for fintech operators building on bank APIs cannot assume legacy methods will be gone by any specific date. And the 85-90% asset concentration that keeps pricing power with the incumbents will not shift without genuine competition.
The Commerce Commission shortened the hybrid period, and that is real progress. But shortening a period that has no firm end date is an improvement in direction, not in certainty. Until the banks commit to switching off legacy access, open banking remains a promise with an asterisk. And every month that asterisk survives is another month the oligopoly gets to set the terms.
Sources
- BusinessDesk: Big banks welcome ComCom’s latest open banking timeframes (2026-03)
- BusinessDesk: ComCom shortens hybrid period as open banking dawns (2026-03)
- BusinessDesk: Payments NZ and MBIE resist claims of significant disconnect in open banking progress (2026-03)
- Commerce Commission: Retail Payment System Update on open banking progress (2024-12)
- Open Banking Expo: New report recommends accelerating Open Banking in NZ (2024)
- Beehive: Table of progress on banking issues (2025-08)
- MBIE: Fact sheet on open banking regulations (2025-05)
- NZBA: Submission on open banking regulations exposure draft (2025-08)
- NZ Herald: New Zealand banks face scrutiny as open banking delays hinder competition (2024)
- Open Conversations: Commerce Commission issues update on open banking expectations (2026-03)