Open Banking
Have you ever wished your bank could integrate directly with another product you use, like an app, a website like Sorted, Xero, or even a spreadsheet? Today, we’re looking at the pros and cons of open banking, and we’d love to get your two cents on it too. Please have a read below and let us know your thoughts using the poll in this article.
What is Open Banking
Open banking is a new way of accessing and sharing financial data. It allows other businesses, apps or websites to offer financial services and access your bank account information with your consent. When you give permission to a company or organisation to access the information you specify from your bank account, they use a special tool called an API. This keeps your information safe and ensures that only the authorised business can see it. In other words, with your consent, you can use these providers to track your spending, compare prices for financial products and automate your finances.
How does open banking work?
At a high level, the government must first build a framework and set rules and processes around how banks and businesses can share and access user information - always with the account holder’s consent.
Banks create their own APIs that can call information from their system. Banks can choose to keep their APIs private and only work with specific partners they choose or offer open APIs that anyone can use to create an application.
Usually, the information shared via open banking APIs includes information about the account, like account numbers, balances and transaction history. It is also possible to build APIs that allow sharing of investment portfolios, earnings or credit information. APIs can call data for a wide range of applications. The government will establish rules around how this information can be used, e.g. using purchasing history to gauge “responsibility for mortgage loans.”
What are the benefits of open banking?
There are many benefits to open banking. Many of these benefits align with Debut’s goals to give customers more control over their money, improve financial literacy among New Zealanders and offer greater transparency when comparing financial services so that customers can make informed decisions.
Choice! More Control for Customers!
Open banking gives customers more choices over how they manage their finances. You can easily get help from other companies or organisations to find the best deals on financial products, keep track of your spending, and automate finances. 
Open banking represents a whole new way for Kiwis to work with businesses they already trust to help them grow and manage their finances, find and compare loans, pay bills and get paid and much more.
Better Data = Better Decisions
Open banking can help to improve financial literacy by making it easier for consumers to understand their finances. You’ll be able to use clever tools from businesses and websites you trust to gain personalised insights that help you to make better financial decisions. It’s pretty rad. 
Debut is all about putting Kiwis in control of their banking experience. Most people are not financial experts, but everyone can benefit from having more general awareness of their spending coupled with direct insights on how their savings, investments and budgets are tracking. Open banking could allow for some incredible integrations.
More Competition in the Financial Services Space
The financial sector in New Zealand is less Wolf on Wall Street, and more like Crickets on Queen Street as there are fewer big players here than in other countries. Open banking can increase competition in the financial services industry, leading to lower prices and better products for all Kiwis.
Challenges of Open Banking
While open banking has many benefits, some challenges also need to be addressed. One challenge is security. Open banking relies on the secure sharing of customer data, and this data must be protected from unauthorised access.
While we build the next generation of banking with Debut, we’re not taking anything for granted, least of all your security. 
As part of our commitment to keep Kiwis in control, it’s paramount that we make sure that no one else can access your banking, history or information without your permission or your knowledge. 
Balancing Security and Access
Open banking is sort of like having a house and then giving someone a key. If you’ve given the key to someone you trust, like a dog walker or a mate, and you know when and why they’re coming by, everything’s fine. However, if this person goes into your house when you don’t know about it or they help themselves to food in your fridge, we may have a problem. 
If your data is not secure, it could be stolen or misused. This is why it is important to only give permission to businesses and apps that you trust and review permissions and activity often. 
For example, when using a rewards app, you may be reminded that it has access to your spending history. You can confirm or limit this access to a specific timeframe.
Making Sure Businesses are Legit
Last year, New Zealanders lost an estimated $20 Million due to scammers and fraud, according to a cybercrime report from NZ CERT (RNZ). If not managed carefully, Open banking could make it easier for fraudsters to commit financial crimes. Having a standardised method to register and authenticate third parties before they can request access to your data could help. Flagging those who might be a potential risk is a good start, but even so, scammers are crafty. It is essential to be vigilant about your finances and to report any suspicious activity immediately.
Debut is determined to offer customers the best support to quickly respond to threats. So if you’re communicating with a company and something seems suss, you’ll always be able to get in touch with a member of our support team.
Everything is Hunky-Dory
Companies that want to look at your bank account info must follow strict rules to protect your data. If they don’t, they could get in big trouble and won’t be allowed to offer open banking integration.
Apps ask you to access your camera, photo library, email, and location. This is a safety gate so the user understands what the app wants to use. Debut wants to make sure it’s crystal clear what information businesses need and why. Then it’s up to you to decide whether you’re okay sharing that.
Businesses that meet specific criteria or supply certain information that legitimises them could have a verification symbol to help customers more easily spot which businesses are trustworthy. Companies will be asked to re-apply regularly and whenever they change how or what data is requested.
Debut’s Approach to Open Banking
Open banking has the potential to revolutionise the banking sector in New Zealand but also poses unique risks. With Debut, our objective is to build New Zealand’s smartest bank ever and make sure that customers, their money and their personal information are secure and 100% within their control. 
Making Sure You’re Really You
To help reduce the risk that someone else might be accessing your data or your money in a way that you disagree with, we’ll want to ensure that we have checks in place to make sure you’re really you.
Letting You Know, Just to be Safe
Whenever there’s a change to who has access to information on your account, you should know about it. An email, text message or notification with an option to cancel is an easy way to ensure that you know who has what access and that you can quickly and securely stop it in its tracks. We also think including a way for customers to report this activity right when it happens will help not only stop scammers but also help legit businesses to catch and fix potential issues with their processes.
Your Data is End-to-End Encrypted
Only you and those you explicitly allow can access your data. To help keep things transparent and easy to understand, Debut’s version of open banking would include a built-in list of verified providers. Suppose you choose to work with a provider not on our list. In that case, we’ll double-check with you and let you know that we have not verified this provider and offer an inline option to notify a team member to check them out for you.
Open Banking Overseas
Open banking first really became a thing in the early 2000s. Still, it wasn’t until about 2015 that the European Union made changes requiring banks to share information with other banks. In 2018, the UK went all in on open banking. Today, open banking is offered in Australia, Singapore and the United States.
Open Banking in New Zealand
Open Banking is also coming to New Zealand, and it’s expected to launch in 2024, around the middle of the year. The government has been working with the Reserve Bank of New Zealand, The API Centre, and Payments NZ since 2019 to create an open banking system. The idea is to give consumers more control over their financial data, encourage innovation in the financial services sector, and protect consumer privacy. Pretty cool, huh?
What do you think?
Open banking is still in its early stages, but it has the potential to revolutionise how Kiwis use and access financial services. As open banking continues to develop, we expect to see even more innovative financial services being developed that could be integrated into Debut. These services will help consumers take control of their finances and achieve their financial goals.
Let us know what you think about open banking in the poll below.
Quick Poll:
Should the government mandate that banks offer open banking?
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We hope this article is a helpful introduction to open banking and look forward to sharing more with the community on what Debut and others are doing in this space.
Want to be notified of our next article? Join our waiting list. We’ll also let you know when Debut launches later this year.
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Please note, Debut is not a registered bank under the Banking (Prudential Supervision) Act. This is about our future intentions. Investments with us are not supervised currently by the Reserve Bank of New Zealand.