Westpac NZ says greater action is needed to make it easier for vulnerable New Zealanders to access a bank account.
A new report commissioned by Westpac NZ and carried out by research agency ThinkPlace shows there are substantial barriers that prevent some New Zealanders from opening a bank account.
The Westpac NZ Access to Banking in Aotearoa Report looks at obstacles that exist, outcomes for those who can’t access a bank account and who is most affected.
Rough sleepers, youths without family support, prisoners coming out of jail, refugees and sex workers were among those less likely to have a bank account, according to social agencies interviewed for the research.
Westpac NZ chief executive Catherine McGrath says the report shows being unable to access a bank account has serious and significant negative impacts, with the burden generally felt by people already on the margins.
“Having a bank account goes beyond the mechanics of getting paid, storing money and buying things. Actually, it’s one of the basics you need for modern life.
“The research shows not having a bank account has a profound impact – it makes it hard to pay for a place to live, keep a job and pay bills. It also leaves people open to exploitation and disconnected from their community. This can have a big impact on people’s welfare.”
The World Bank estimates tens of thousands of adult New Zealanders could be impacted.
“We are already working on this issue, but this research brings home the wide range of hurdles for those on the margins, and how they can cumulatively hinder access to a bank account.
“Interviewees said the banking system needs to do a better job serving those most in need. We’ve taken those insights on board and will also be sharing them with other banks and partners in government.”
ThinkPlace spoke to nearly 60 agencies, including government departments, social service providers, advocacy groups and budget advisors.
Lack of ID documents and proof of address were the most commonly mentioned barriers to obtaining an account, but other issues included bankruptcy or insolvency, financial and digital literacy, fear of judgement, anti-social behaviour and location of bank branches.
Ms McGrath said by law, banks needed to vet account holders to minimise the risk of money laundering. As a result, banks asked a lot of questions and required official ID documents.
“We need to know who our customers are, so there will always be identification requirements, but there is definitely scope to make those processes more welcoming, flexible and accessible.”
Ms McGrath said Westpac NZ has taken or is taking the following steps to make banking more accessible:
- Launched ‘New Start’ with the Department of Corrections, helping soon-to-be-released prisoners to access ID, a bank account and debit card.
- Partnering with Oranga Tamariki and VOYCE Whakarongo-Mai to help young people aged 15-17 in care access a bank account and financial education.
- Introducing a new process to better assess bank account applications for individuals who may have previously been declined due to their high-risk status, for example individuals with a history of bankruptcy.
- Making branches more welcoming for marginalised customers by introducing additional training for staff and security guards, and other measures.
“We work closely with partners to understand what we need to do to reduce financial exclusion. As we worked on this issue, it quickly became clear that it is bigger than Westpac, or even the banking sector, and requires commitment from a range of partners to find solutions.”
Ms McGrath pointed to the recent success of the New Start programme which Westpac runs with the Department of Corrections in prisons across New Zealand, which has equipped over 100 prisoners with ID and a bank account.
“Working closely with the Department of Corrections to get New Start off the ground inspired us to do this new piece of work, and find new ways to help others who have previously been overlooked.”
Ms McGrath said Westpac would be sharing the research with others in the industry as well as Government agencies.
“We’ve heard loud and clear that there is scope for the industry to make our branches more welcoming, our processes more understandable and accessible, and our appetite to bank some applicants more open-minded.
“For their part, the Government is making some changes to existing anti-money laundering rules that should make it slightly easier for people to get an account. We support these changes and think further steps could be taken in this direction.”