Westpac New Zealand is piloting a new stripped-back transactional bank account designed to improve access to banking services for all Kiwis.
The new transactional bank account, designed with simplified functionality and additional account restrictions in place, is intended to provide a New Zealanders who may otherwise not be able to access a traditional bank account (for instance, if they do not meet the current legal identification requirements) or those in vulnerable circumstances access to an economy they may otherwise excluded from.
“A bank account is like a passport to the economy. Without one, you struggle to receive work or benefit payments, pay bills or do many of the other day-to-day tasks that allow you to participate in society,” said Westpac NZ chief executive Catherine McGrath.
“In some cases, these kinds of accounts may serve as a pathway, with some people ultimately able to transition to a regular bank account,” she added.
Westpac said it engaged closely with the Reserve Bank of New Zealand (RBNZ) and the wider banking industry to develop the basic bank account pilot.
As well, the bank said it took insights from its Access to Banking in Aotearoa and the NZ Disability and Inclusion in Banking reports to develop the pilot.
A basic bank account, Westpac noted, was also one of the recommendations of the Commerce Commission’s Market Study into Personal Banking Services.
This report noted high exclusion risks for those customers with poor credit histories, those experiencing insolvency or bankruptcy, those fleeing domestic violence, youth in Oranga Tamariki (Ministry of Children) care or former prisoners.
According to figures from the World Bank, around 50,000 New Zealanders – circa 1.25 per cent of the population – remain unbanked.
“Like all consumers, they need access to basic banking services in order to go about their daily lives,” the RBNZ report read, adding that: “We agree with the view that, to improve financial inclusion, a basic bank account should be treated as an essential service that all New Zealanders have access to.”
A basic bank account, as defined by the RBNZ, is a transaction account that, “at its core” ensures that customers can perform basic banking functionality (such as sending and receiving payments), has no account fees (and no or low other fees), prevents customers from going into debt (with no overdraft facility, arranged or unarranged), as well as being de-banked arbitrarily.
“A basic bank account allows the account owner to receive payments such as wages, benefits and pensions and to pay for things or take out cash with a debit card, transfer money to pay bills or other people,” the RBNZ wrote.
In addition to the basic bank account, Westpac NZ said it will also provide financial education resources to support individuals with these accounts, as well as recommending relevant workshops in its Managing Your Money financial wellbeing program.
Through the pilot phase, Westpac NZ said it will take referrals from community groups, as well as through Westpac’s Extra Care team.
The basic account pilot is among several initiatives by Westpac to improve access to banking, it said, including processes to support youth in opening bank accounts without parental or guardian consent and a New Start program to provide prisoners with a debit card and a bank account when released.
