Banking Competition Inquiry Report Released as Govt Eyes Sector Reforms

Minister Willis said the inquiry supports the Government’s wider efforts to improve consumer choice and competitive pressure in the sector.

Finance Minister Nicola Willis has welcomed the release of the Finance and Expenditure Committee (FEC) Inquiry into banking competition, describing it as a crucial step in the Government’s agenda to deliver fairer, more competitive, and more innovative banking services for New Zealanders.

The inquiry, which examined business and rural banking as well as lending to Māori entities, comes at a time when concerns over high bank profits and limited competition in New Zealand’s financial sector have drawn significant public attention.

Building on Previous Banking Reforms

Minister Willis said the inquiry supports the Government’s wider efforts to improve consumer choice and competitive pressure in the sector.

“Since the Commerce Commission’s 2024 market study into personal banking services, the Government has made significant progress in creating better banking for Kiwis and communities,” she said.

Key measures already underway include:

• Open banking implementation – giving customers more control over their financial data and the ability to seamlessly switch providers.

• Greater competition in prudential policy decision-making – ensuring banking regulation reflects a balance between financial stability and competitive outcomes.

• Capital-raising scope for Kiwibank – enabling New Zealand’s largest locally owned bank to expand and act as a stronger disruptive competitor.

Willis also pointed to the ongoing Reserve Bank review of capital settings for deposit takers, which is expected to be completed by late 2025.

“We want to see settings that preserve financial stability while encouraging investment, job creation and income growth,” she said.

Inquiry Process and Public Engagement

The FEC Inquiry drew significant public and industry interest, receiving 148 submissions and holding public hearings between October 2024 and April 2025. This included testimony from the country’s four largest banks – ANZ, ASB, BNZ, and Westpac – as well as smaller financial institutions, business groups, rural sector representatives, and Māori economic development organisations.

Committee members investigated whether smaller and alternative banking providers face barriers to entry, whether rural businesses and farms are being underserved, and how Māori entities can access fairer and more flexible financing.

Next Steps: Government Response by November

The Minister thanked the Committee for its comprehensive work and said the Government would carefully review the report and its recommendations.

“The Government will review the report and its recommendations and will provide a response with proposed action items by November 2025,” Willis confirmed.

The report’s findings are expected to inform the next wave of Government policy decisions in the sector, shaping reforms that could increase competition, improve lending conditions for small businesses and farms, and support more diverse financial services in communities across the country.

Why Competition Matters

Banking is a cornerstone of the New Zealand economy, underpinning access to credit, investment opportunities, and financial services for households and businesses. Critics have long argued that the market is overly concentrated in the hands of a few major players, contributing to high costs for borrowers and limited innovation.

The Government has signalled that enhancing competition is not just about consumer choice but about driving economic growth and resilience by making credit more accessible and fostering innovation in financial services.

With the release of the FEC Inquiry, policymakers, banks, and communities now await the Government’s official response later this year, which is likely to set the stage for the most significant reforms in New Zealand banking in more than a decade.