Financial advisers stand to reap significant operational efficiencies from the looming ‘open-banking’ upgrade, a new study by specialist technology firm, Akahu, suggests.
The Akahu report says the government-backed move to encourage open-banking providers in NZ will flow beyond account transfers, lending or payments into wider financial services including advice.
In particular, the paper says streamlining client ‘fact-finds’ via the new tech-enabled links to institutions would fast-track the process for both advisers and clients.
“This factfind process involves collecting financial data, and the advisor will typically want to know about their client’s income, expenses, and the balances of all relevant financial accounts. Data from the factfind process enables an advisor to provide advice that is based on recent data, and is personalised to the client,” the Akahu report says.
“Open banking provides advisors and clients with a simple, accurate, and ongoing way to have a shared view of financial data. This enables advisors to provide more proactive and responsive advice over the course of the advisory relationship.”
Josh Daniells, Akahu chief, said the new open-banking world – due to be regulated in NZ for the first time under the Customer Product and Data Bill (CPD) currently before parliament – would also smooth many other financial advisory operations such as mortgage applications or client data feeds through wrap accounts.
“These tools will make the advice process more efficient and precise,” Daniells said. “And the clients will have to do less work, too [with automated data flows].”
But while the concept has only recently emerged on the political agenda, New Zealanders have, in fact, been using open-banking tools in one form or another for almost two decades, he said, with bank-to-bank transfer services (POLi, for example), accounting systems like Xero and budgeting software.
Under CPD, however, bank customers – the first sector along with electricity firms to fall under the proposed legislation – will have control of their personal data including the right to share the information with accredited third-party services.
Most NZ banks have already committed to develop a shared application programming interface (API) hub starting this year, the Akahu report says, with simple payment services the first apps off the rank.
“Regulation of fees, accreditation, liability, and API functionality would create an even playing field for innovators, and provide certainty to all participants,” the Akahu report says.
Daniells said the open-banking API offerings should grow in sophistication over time with both intermediaries such as financial advisers and, hopefully, clients reaping the benefits.
Founded in 2020 by Daniell, Ben Lynch and Oliver Fawcett, with some start-up funding from Westpac, Akahu helps link a range of apps to banks and other financial services including KiwiSaver providers.