Open finance: Upstarts join forces in bid to shake up banking and finance bigwigs

Amid much broader bank and finance upheavals, a Kiwi startup and its new partner hope to shake up the payroll world and deliver security and productivity benefits. Photo / Getty Images

A Kiwi startup has joined forces with a big human resources firm in hopes of speeding up the country’s shift to open finance.

The move comes amid broader upheaval in the banking sector, where everything from customer data to bank profits and consumer rights is up for discussion.

Akahu and Employment Hero said their new deal should remove clunky old-fashioned payroll processes, with benefits to staff and employers.

It remains to be seen how the upstarts might tackle established players in the sprawling HR and payroll scene but the companies, announcing the partnership, said Employment Hero’s core platform reduced admin time by up to 80 per cent.

“Employment Hero’s integration with Akahu allows payments to be made directly within its payroll platform, saving time and reducing the need for manual bank file uploads through external systems,” the companies added in a joint statement.

Akahu and Employment Hero said the partnership would help accountants, bookkeepers, payroll bureaus and business owners automate bulk bank payments to employees.

The two companies said the partnership would be protective of consumers’ data.

They said consumers’ bank accounts would be connected once through Akahu, the secure third party, and into Employment Hero, the trusted payroll software.

They said this would allow full control over connected bank accounts, which could be updated or removed whenever necessary.

The two companies said many Kiwis already experienced open finance through accounting software such as Xero, where bank accounts could be linked and consent provided to automate retrieval of transaction data.

Employment Hero and Akahu said their system should have privacy and security benefits.

“Employers will no longer need to provide bank credentials to staff, a process that is charged with processing payments.”

“By partnering with Akahu as an open finance platform, we can now provide flexible payment options to all employees, which is ahead of the curve in the New Zealand market,” said Phil Bernie, Employment Hero head of product.

Akahu chief executive and co-founder Josh Daniell said automating payroll payments was a huge upgrade in terms of security, accuracy and time savings.

Akahu has already rolled out technology letting customers of big banks use financial account data in third-party apps.

And Employment Hero this month took on the likes of job site Seek with a new app called Swag, which deployed artificial intelligence to accelerate jobseeking and hiring processes.

New Zealand’s big four banks have been given until the end of 2024 to be live with Payments NZ open banking standards.

Broadly speaking, open banking lets third-party services access banking transactions and data from banks.

Akahu has previously said its open banking products could help tackle scams and banking mistakes.

Some open banking promoters argued the technology could help achieve lower transaction fees, more choice and more competition.

Chapman Tripp partner Luke Ford said New Zealand was in some ways trailing other advanced economies in the adoption of open banking.

But this did at least suggest the country had a chance to learn from other nations.

“We are lagging. It might play out to our advantage in some ways,” Ford said on Wednesday.

Ford and Chapman Tripp colleague Penny Sheerin, both finance experts, previously said government moves to introduce open banking fell within the broader consumer data right framework (CDR).

“Through open banking, the intention is that consumers will be able to access financial products and services better tailored to their individual needs,” they wrote.

They said CDR moves would likely mean some tough decisions for banks about prioritising open banking and other industry-changing factors.

Those factors included the planned depositor compensation scheme, liquidity and outsourcing regulation, modernisation of payments infrastructure and ongoing digital disruption.

Privacy Commissioner Michael Webster last week encouraged submissions on a draft law aimed at giving people greater control over personal information.

The draft Customer and Product Data Bill established a CDR, and the Government indicated banking would be the first sector where such consumer rights would be enshrined.

John Weekes is online business editor. He has covered politics, crime, courts and consumer affairs. He rejoined the Herald in 2020, previously working at Stuff and News Regional, Australia.