A view on the market study into Personal Banking Services in NZ

Marcos Dodero
August 2023

On August 10th, the Commerce Commission released the “Preliminary Issues Paper” on the Market study into Personal Banking Services in New Zealand.

I’ve pulled out a few points I found interesting:

  1. “We will seek to understand how banks make their interest rate decisions in respect of home loans and deposits”.
  2. “The Reserve Bank has observed that: Rates on short-duration deposits, such as transaction and on-call savings accounts, have not increased as quickly as the Official Cash Rate and the interest income banks earn on their assets. Consequently, these deposits have become increasingly profitable sources of funding relative to term deposits or issuing debt in wholesale markets”.
  3. “We will seek to understand trends in prices for home loans in New Zealand, including whether new customers get better rates than existing customers, the role of mortgage brokers, and whether price competition is clear and transparent, or pricing comparisons are made harder by discretionary discounting from advertised lending rates”.
  4. “Regarding innovation, we intend to consider the following high-level questions:- Are services being introduced overseas that are not being offered in New Zealand?- Is there demand for new innovative services that is currently unmet? If so, why?- Is there anything holding back the introduction of these new or innovative services in New Zealand (for example, the current regulatory settings, or other barriers)?” These seem to be significant updates that have flown under the radar. Click on the link for the full paper or a summary. Preliminary Issues paper - Personal banking services, Market study.