She was also open to partially floating the bank on the NZX.
Longer term, the competition watchdog wanted to see open banking accelerated.
The idea with this is to enable bank customers to share their personal bank data with third parties, such as financial technology firms that can provide banking services – make payments, or help with budgeting, for example.
The commission ditched a controversial suggestion in its draft report, released in March, for the Reserve Bank to change its bank capital rules.
The central bank voiced strong opposition to changing these rules, aimed at preventing banks from collapsing.
The commission concluded that if the Government wanted the Reserve Bank to weaken financial stability to strengthen competition, it might need to change the law under which the Reserve Bank operates.
Willis, in an interview with the Herald earlier this month, said she was open to doing so if a strong enough case could be made.
The commission said its 14-month study found “a stable, highly profitable, two-tier oligopoly with no disruptive maverick and a lack of obvious or aggressive price competition”.
Commission chair John Small said recent investigations had reinforced views competition was not working as it should in the sector, and consumers were missing out as a result.
Here is a summary of the commission’s recommendations:
Capitalise Kiwibank
- The Government, as Kiwibank’s owner, should consider what is necessary to make Kiwibank a disruptive competitor, including how to provide it with access to more capital.
Accelerate and co-ordinate progress on open banking
- Industry and the Government should commit to ensuring open banking is fully operational by June 2026.
- The Government should support open banking by being an early adopter and taking an All-of-Government approach to adopting payments enabled by open banking functionality.
Ensure the regulatory environment better supports competition
- The Reserve Bank should broaden the way it undertakes competition assessments under the Deposit Takers Act, placing more focus on reducing barriers to entry and expansion in the banking sector.
- The Reserve Bank should place greater emphasis on competition in several specific upcoming decisions.
- The Government should ensure that existing legislation and future decisions do not unintentionally favour banks, particularly larger banks, over other providers.
- The Government should lessen barriers to switching home loan providers as part of the Credit Contracts and Consumer Finance Act (CCCFA) reforms.
- The Government should prioritise competition concerns when reforming the Anti-Money Laundering and Counter Financing of Terrorism regime.
Empower consumers
- Banks should invest in making improvements to its switching service.
- Home loan providers should present offers in a readily comparable manner, accounting specifically for the effective value of cash contributions.
- Home loan providers should pro-rate all clawbacks for mortgage adviser commissions and bank cash contributions.
- Mortgage advisers and banks should make changes to promote price competition and choice for home loans.
- Industry and the Government should prioritise reducing barriers to lending for housing on Māori freehold land.
- Industry should make basic bank accounts widely available.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.