Reserve Bank initiatives to support financial inclusion
Toitū te Ōhanga, Toitū te Oranga
The Reserve Bank works to enable economic well-being and prosperity for all New Zealanders.
This means making sure that our actions to promote financial stability consider everyone. A fully participative system is a stronger system. It reinforces the social licence under which we operate and supports understanding of our work by all in society.
Financial inclusion improves the well-being of individuals and improves the efficiency of the system. A financial system that is fully inclusive better mobilises savings and investments in the productive sector, and reduces information, contracting, and transaction costs across the economy, with clear efficiency gains.
Financial inclusion is demonstrated by:
- broad access to banking and insurance services;
- wide availability of accessible and safe financial products; and
- people understanding the benefits of financial products and being sceptical about harmful conduct such as irresponsible lending, pyramid schemes, or other financial scams.
We work to increase financial inclusion in a variety of ways, including removing barriers, supporting financial education, and working with our stakeholders.
Removing barriers and creating opportunities
Regulatory requirements are designed to promote financial stability and protect customers, but they should not make it unnecessarily difficult for people to gain access to financial products, for small firms to operate, for new competitors to enter the market, or for community organisations to provide innovative services to meet community needs.
We take a proportionate approach to our work, with fewer requirements and less intensive supervision on smaller, less risky entities. We are working with other members of the Council of Financial Regulators (CoFR) to make it easier for fintech innovators and entrepreneurs to navigate the regulatory system, breaking down the barriers they may face.
We aim to maintain high standards that support the integrity of the financial system. In general, our regulatory tools apply to the institutions we regulate, rather than imposing a direct customer or distributional impact. However, we recognise that some regulatory settings may inadvertently contribute to financial exclusion, for example through the ‘know your customer’ requirements in the AML/CFT Act. Financial services providers may not always have a commercial imperative to offer services to everyone or to offer the type of services that people want.
We are working with Pacific Island central banks and international organisations to make remittances to the Pacific more accessible, safe and cost-effective. In doing so we hope to maintain financial corridors and services to enable Pacific countries’ recovery and growth, which in turn will support the stability and prosperity of our regional economy.
Domestically, the availability of in-person banking services has been declining in regional New Zealand, some parts of our population are under-served, and the risks associated with climate change may make insurance cover unavailable or unaffordable in certain areas.
We are committed to working with financial services providers to better understand these challenges and to address concerns or break down barriers where they negatively impact New Zealanders, particularly our most vulnerable communities. This includes considering innovative solutions and how they could support wider financial inclusion and well-being efforts.5 Our work on the future of money includes developing our role as a steward of the cash system – given the important role that access to cash plays in the lives of many New Zealanders – and considering how a central bank digital currency could support wider financial inclusion and well-being efforts.
We want New Zealanders to be informed about money. The Reserve Bank supports the National Strategy for Financial Capability, which seeks to ‘demystify money’. As part of our contribution to this, we have been sponsoring ‘Smart $’ – a programme of financial education in schools run by the Life Education Trust. This supports our overall approach to financial education, which also includes regular public communications across different channels, including social media, and the development of our Bank Financial Strength Dashboard, which will soon be extended with a version in te reo Māori.
Working with our stakeholders
We are working with our stakeholders to identify challenges relating to access to capital across the financial system with an initial focus on Māori capital seekers, following the publication of the Māori Economy report, Te Ōhanga Māori.6 We continue to build strong and collaborative strategic relationships with iwi and hapū collectives, Māori-owned businesses, representatives of Māori banking, and other central banks around the world, specifically through the Central Bank Network on Indigenous Inclusion. This enables us to develop a common approach to financial inclusion and share and identify challenges and solutions.
More broadly, we are working with other agencies in CoFR and elsewhere to ensure we integrate our individual actions and identify initiatives that we can pursue collectively to support financial inclusion.