Latest / Early Edition with Ryan Bridge / Claire Matthews: Massey University Financial Professor on Labour's banking policy

Transcript

Claire Matthews: Massey University Financial Professor on Labour's banking policy · Early Edition with Ryan Bridge

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  Speaker 1: And Labour is promising to shake up the sector if re-elected.
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  Speaker 1: They want to flood the market with competition, making it
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  Speaker 1: easier for smaller banks to compete with the big four.
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  Speaker 1: Also on the wish list is access to 24-7 real-time
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  Speaker 1: payments by 2030. So you can do your banking seven
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  Speaker 1: days a week.
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  Speaker 2: Labour's approach is not going to be to use the
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  Speaker 2: bully pulpit to tell the banks that they need to
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  Speaker 2: reduce their profitability. We need the small competitors to do
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  Speaker 2: the work of competing away some of those big margins.
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  Speaker 1: So Claire Matthews is the head of Massey University's School
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  Speaker 1: of Accountancy, Economics and Finance and joins me right now. Hello, Claire.
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  Speaker 3: Marina Andrews. Could this work? Well, I guess anything can work.
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  Speaker 3: It all depends how it comes together at the time. Well,
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  Speaker 3: what do you reckon? I think there's some things that
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  Speaker 3: can be done that will make a difference, but I
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  Speaker 3: think they're probably hyping it up more than they really
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  Speaker 3: should be. In terms of real-time payments, So we already
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  Speaker 3: have pretty close to that. We're not quite there. There's
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  Speaker 3: a lot of work already being done. So it's not
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  Speaker 3: really anything fantastically new. There's no particular timeframe. The Reserve
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  Speaker 3: Bank is leading it at the moment. They're still working
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  Speaker 3: on exactly how they're going to do it. But it's
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  Speaker 3: also important to remember that real-time payments is not, I
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  Speaker 3: want to say costless, that's not probably quite the right word,
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  Speaker 3: but there is a risk associated with it. At the moment,
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  Speaker 3: because there's a little bit of a delay between when
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  Speaker 3: you generally make a payment and it goes through, there's
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  Speaker 3: a small window if and I'm thinking specifically of scams here,
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  Speaker 3: not if you make a mistake, then it's less likely
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  Speaker 3: to be an issue, but if you're subject to a
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  Speaker 3: scam and you suddenly realise, if the payment hasn't actually finished,
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  Speaker 3: then you've got a small window in which you can
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  Speaker 3: get it back. Once you've got real-time payment, that's gone.
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  Speaker 1: Yeah, exactly. I get that. Now, I thought it was
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  Speaker 1: a little bit hyperbolic when they said we're going to
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  Speaker 1: flood the market with competition in banking, but the only
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  Speaker 1: way they're going to be doing that is by changing
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  Speaker 1: the rules and regulations. But are there people actually with
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  Speaker 1: the money and the infrastructure who, around wanting to come
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  Speaker 1: in and be a new bank in this country? Are
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  Speaker 1: they really going to come just because the rules and
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  Speaker 1: regulations change a little?
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  Speaker 3: I definitely agree it's hyperbolic. There's a lot of work
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  Speaker 3: being done and there's a lot of fintech companies coming
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  Speaker 3: in already. We're not really talking banks, we're talking smaller institutions.
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  Speaker 3: I'm a little concerned about the suggestion that they're going
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  Speaker 3: to change the rules for them and make it easier.
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  Speaker 3: These people are dealing with people's money. There are companies
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  Speaker 3: that are busy doing stuff at the moment. It all
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  Speaker 3: just takes time. and it's a matter of it actually
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  Speaker 3: being profitable. It's all very well to have these wonderful ideas,
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  Speaker 3: but it's how do you monetize that? How do you
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  Speaker 3: actually make money from whatever you're doing?
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  Speaker 1: Very good point there, because in this unicorn world with
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  Speaker 1: so many banks all over the place, how do we
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  Speaker 1: know that Kiwis will actually save, or will we just
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  Speaker 1: have even more banks making mega profits?
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  Speaker 3: I'm not sure that you'd get a whole lot more
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  Speaker 3: banks making mega profits, and I don't think these institutions
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  Speaker 3: are going to be banks. But it's difficult to know
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  Speaker 3: how much money they will take off the banks in
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  Speaker 3: actual fact, to what extent they will actually replace bank
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  Speaker 3: services and to what extent they will be actually offering
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  Speaker 3: something different in addition to what the banks are doing.
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  Speaker 1: Claire, I thank you for your time today. Claire Matthews
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  Speaker 1: from Massey University.