by Jenny Ruth
The API Centre was established in 2019 and has developed standards for open banking known as application processing interfaces (APIs) that will facilitate open banking.
In a white paper, Payments NZ says the Customer and Product Data Bill, which was introduced into parliament by the outgoing government, has some shortcomings.
The bill aims to establish that consumers have a right to access their own data and to direct who else has access to their data with the banking industry set to be first cab off the rank.
“We have concerns that, as currently drafted, the bill does not fully embrace the strategic value already created by the centre and industry with a view to growing and further developing scalable and sustainable products and services for customers,” the white paper says.
“It is critical to get the bill right because banking will be the only sector where the new legislation will regulate existing activity under the auspices of the centre,” it says.
“It is also important the legislation acknowledges consumer data rights and how they might be used in the digital economy is still very much developing.”
Payments NZ, which manages NZ's payments system, points to the approach the UK has taken which it says “has changed from a narrow focus on banks to a much broader focus on smart data.”
The bill needs to “leverage the work of the centre to drive innovation and uptake” and to “reflect the importance of standards that are market-led,” the paper says.
Progress achieve to date “could be accelerated if the bill created the power to hold a designated sector accountable for delivering to outcomes,” it says.
“That means the progress Payments NZ has made by setting up the centre and delivering the first wave of new standards could be leveraged, accelerated and sustained.”
It argues that the API Centre has developed a trust framework based on best-in-class security standards, informed customer consent and leading technical standards, as well as operation rules, guidelines and “balanced ecosystem governance.”
“Additionally, the centre is currently working with data experts in Maori data governance to understand how those concepts might be incorporated into our rules, standards and practice,” it says.
“Without a clear bridge between the current ecosystem and the proposed statutory scheme, there is a chance the gains made to date will not be capitalised on, at the cost of long-term market prospects.”
The API Centre has set a deadline of May next year for the four major banks to be ready to implement open banking with the government-owned Kiwibank following in 2026.
A number of start-up tech companies are already working on implementing open banking applications.
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