A Look Ahead report by law firm Chapman Tripp suggests 2025 will be seen as a turning point for the banking sector. Photo: 123RF
The banking industry is in for some changes with sweeping regulatory reforms, digital innovation and the changing expectations of a younger generation of customers.
A Look Ahead report by law firm Chapman Tripp suggests 2025 will be seen as a turning point for the banking sector.
Chapman Tripp partner and report author Luke Ford said Generation Z, born between 1997 and 2012 and currently aged between 13- and 28 years old, will reshape the way the industry engaged with customers.
"Young, digitally-savvy New Zealanders are demanding new types of financial services, forcing banks to innovate or risk losing relevance. Their appetite for alternative products is reshaping the market," Ford said.
"Major reforms - such as open banking, a new Depositor Compensation Scheme, and stricter capital requirements - are bringing New Zealand in line with global standards, but also creating new pressures and opportunities."
There would be opportunities and challenges for banks, particularly increasing competition from overseas financial institutions, he said.
"As traditional banks adapt, smaller and non-traditional players are poised to thrive, especially those offering superior digital experiences or higher returns."
However, the report warns of risks ahead for those who fail to innovate and respond to changing customer expectations.
"Without bold innovation, New Zealand risks lagging behind global banking systems that are rapidly advancing in digital payments and capital mobility."
Ford said efforts to align regulations with global best practice could be undermined by local regulatory disagreements, risking inertia at a critical time for innovation."
The changes would affect everyone from savers to major businesses, he said.
"The banking experience is set to become more digital, more competitive, and more aligned with international trends than ever before."
Regulators will need to move quickly to keep up with changes, he said.
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