We’ve had a busy start to 2023 and delivered some very significant pieces of work and ticked off important industry milestones, all while keeping the momentum going across our broader work programme. Read our full company update below.
Payments Direction
The Payments Direction team has been progressing the real-time capability programme this year. We have focused on one-to-one engagement with Participants and Members as we finalise the draft of Chapter 1 of the Industry Strategic Investment Case (ISIC). The ISIC, which will be released in three chapters, sets out the case for next-generation real-time capability as a key component of a broader payments system modernisation package. It will outline the proposed ecosystem design and support a decision on next steps.
We have worked with Accenture to articulate the components of a next-generation payments platform and to understand the functionalities and use cases the system should enable, in what sequence and why. This work will be used to propose a high-level roadmap of a next-generation ecosystem and will provide input into Chapter 2 of the ISIC.
We’ve also partnered with Accenture to produce and test a financial model, initially considering potential volumes for a real-time system and how these could evolve over time.
Following the foundational workshop series and one-to-one workshops we held in the first part of the year; we are now preparing to hold in-person deep dive workshops with Payments NZ Participants and Members. This will build on the foundational ecosystem design and refine the recommendations we make to the Payments NZ Board.
Read more about our real-time work in our June programme update, including how to get involved. In the coming months, we’ll be progressing our wider strategic activities including a refresh of our 2020 Payments Modernisation Plan and running our annual consumer study for 2023. Later this year we will also be doing a deep dive into the regulatory and policy theme that was part of our environmental scan, looking at how this area of the ecosystem is changing.
Clearing systems
The clearing systems team has had a big start to the first half of the year with the successful delivery of two major infrastructure projects which will have a significant impact on Aotearoa’s payments system in the years to come. These two projects, taken collectively, will make the payments system even more interoperable, innovative, safe, open, and efficient.
We wrapped up the first phase of the ISO 20022 messaging standard project in mid-March. This generational change in global payments infrastructure is part of an initiative by Swift and by November 2025, will apply to all payments that go through our High Value Clearing System (HVCS), such as high value payments between corporates or property settlements.
Aotearoa was the first country in the world to start processing cross-border transactions using ISO 20022. The rollout was a significant effort on a global scale, with more than 11,000 institutions in over 200 countries and territories beginning the migration to this new messaging standard for payments and related messaging. For the last three years, 13 different financial institutions in Aotearoa and their multiple representatives, led by Payments NZ, have been involved in the roll-out. This is another great example of strong industry collaboration which will lead to world-class payments for Aotearoa.
Most recently, we wrapped up a substantial, multiple-year project to move Aotearoa to seven-day payments processing, 365 days a year. This means that electronic bank payments made on public holidays and weekends can now go through on the same day, every single day of the year.
This was a major industry change project led by Payments NZ and has involved huge effort from the industry, particularly our Participant banks – ANZ, ASB, Bank of China, BNZ, Citi, HSBC, ICBC, Kiwibank, TSB and Westpac, and the Reserve Bank of New Zealand Te Pūtea Matea.
Seven-day payments processing is the next evolution of payments in Aotearoa, signalling the end of the traditional ‘five business days’ model for electronic bank payments like direct credit transactions, direct debits, automatic payments, and bill payments. The retail payments system that is affected by this change transacts over $1.5 trillion of payments annually. To find out more about this change, read the media release and Q&As on our website.
API Centre
The API Centre has had a great start to the year and most recently published its first minimum open banking implementation plan for Aotearoa. The plan, which is available now on the API Centre website, sets out firm timelines for five of its banks – ANZ, ASB, BNZ, Kiwibank and Westpac – to be operationally and technically ready to partner using the centre’s standards.
This marks a significant milestone in Aotearoa’s open banking journey, enabling third party organisations, such as fintechs, and payments service providers who are interested in partnering with banks to develop products and services, to now have the certainty to plan ahead. Ultimately, it will benefit consumers by allowing them to have more choice when making payments and sharing their financial data.
The API Centre is continuing to progress standards development and has gone out to Standards Users and Community Contributors seeking feedback on the priority and importance of potential features to include in the pipeline for future development. In addition, our Standards Users and Community Contributors are reviewing version 3.0 of the centre’s Account Information and Payment Initiation standards and providing feedback prior to this latest version being published.
In anticipation of the open banking implementation milestones in 2024, the centre is working to a comprehensive roadmap and are considering how we develop customer trust, support our Standards Users with their open banking implementations, and better facilitate them entering into partnerships to create innovative products and services for consumers. All this work will ensure that the services offered by the centre are used by the industry to build a-fit-for-purpose open banking ecosystem for Aotearoa.
In the meantime, our open banking community continues to grow at pace. We reached a new milestone for the API Centre, with now over 230 Community Contributors and 25 Standards Users made up of 8 API Providers and 17 Third Parties part of the centre. We encourage anyone who would like to be more closely involved with our open banking work to sign up as a Community Contributor.
Regulatory radar
It has been a busy first half of the year on the regulatory front. The much-anticipated announcement by the government announcing the release of the exposure draft of the Customer and Product Data Bill was made in June, which will bring in a consumer data right regime for Aotearoa.
As leaders of open banking in Aotearoa, we are pleased that the Consumer and Product Data Bill discussion document states the government intends to build on the standards already created by the Payments NZ API Centre. We look forward to working through this consultation in detail. Read more about our response to this draft Bill on our website.
Additionally, we’re preparing to respond to the Reserve Bank of New Zealand Te Pūtea Matea’s (RBNZ) Exchange Settlement Account System (ESAS) review. This consultation, which focuses on a risk assessment framework to assess further opening up of access to ESAS has important considerations for Payments NZ, as all Participants of our clearing systems must be ESAS account holders. Also on our radar is the consultation by the government on ‘Strengthening the Resilience of Aotearoa New Zealand’s Critical Infrastructure System’.
And earlier this year, we responded to the Reserve Bank as they gathered information on our Settlement Before Interchange (SBI) payments system and our High Value Clearing System with a view to determining their systemic importance in preparation for FMI designation. We also made a submission on another RBNZ Future of Money consultation, this time on private innovation.
All our past submissions are available to read on our website.
Making connections
We were pleased to be able to hold a good mix of face-to-face and online industry events in the first half of 2023. In February, we sponsored and were involved in the FinTechNZ Hui Taumata 2023, which took place in Auckland. Payments NZ had an exhibition booth at the hui where we enjoyed meeting people from across the industry with an interest in open banking and real-time payments. Our Chief Executive, Steve Wiggins, was part of a panel session where he shared his insights into Aotearoa’s fintech sector. Later in the day, our GM Strategy and Corporate Affairs, Jane-Renee Retimana, and API Centre Manager, Phil Cass, hosted a roundtable discussion on open banking and Aotearoa’s CDR.
On International Women’s Day (8 March) we held our first The Link women’s event for the year in both Wellington and Auckland. Our theme for the day was #EmbraceEquity and we were delighted to have media icon Hilary Barry speak about her work and life, then lead us through a group discussion around the topic of embracing equity and in particular, what that looks like for women. We also hosted our first The Forum of the year, which focuses on discussing strategic industry issues. It had good cross-industry representation and topics discussed included real-time payments, accessibility and payments, and broader resilience.
In May, we were part of Techweek again where this year we hosted two webinars looking at key work programmes for Payments NZ and the API Centre in open banking and next-generation real-time payment systems. The webinars, ‘Deep dive into the world of open banking standards’, and ‘Next-generation real-time systems – an architecture perspective’, were very well-received by the industry and we got some thought-provoking insights from our speakers and panellists.
Looking ahead to the rest of the year, we’re looking forward to hosting more The Hub sessions in both Auckland and Wellington and another The Link event for women who work in payments. We’ll share more information about these events and how you can register to attend as they come up. In the meantime, we encourage those who haven’t already signed up to subscribe to our mailing list to receive news and updates about us, including event invitations.