Bank competition study on services, prices and profits

In its preliminary issues report, the commission outlines the study core; deposit and overdraft account services, personal loans, and mortgage and credit card lending rather than KiwiSaver, wealth management, insurance, and foreign exchange.

The paper does not pre-suppose there are competition issues in the sector.

At its core, the commission says, banking involves taking deposits from lenders and extending loans to borrowers. Retail deposits and home loans are typically a bank’s largest sources of funding and lending. The commission will also consider other products to build a complete picture of competition between personal banking service providers.

The study will take 14 months to assess whether there is enough competition in the sector and whether bank prices and profits have been “too high for too long” because of market inefficiency.