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A new “basic” bank account with simplified onboarding and increased control over transactions is a step forward for financial inclusion, say industry experts.
Westpac NZ's new basic bank account will be a transactional bank account with simplified onboarding processes to support people who currently struggle to meet legal identification requirements.
Other restrictions can also be adjusted depending on a customer’s circumstances and needs, such as only being able to accept payments from certain organisations or only being able to make payments up to a certain amount.
Reserve Bank of New Zealand Principal Adviser for Financial Inclusion Tom Bayliss said the RBNZ welcomed the approach taken by Westpac to pilot a basic bank account.
“An inclusive financial system is one in which all New Zealanders have reasonable access to financial products and services that meet their needs,” Mr Bayliss said.
“We would like to see other banks pilot basic bank accounts, as an important contribution to financial inclusion for underserved and excluded customers.”
Westpac NZ CEO Catherine McGrath said 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.
“Research we have commissioned over the past few years, including the Westpac NZ Access to Banking in Aotearoa report and the Westpac NZ Disability and Inclusion in Banking report, has really brought home the need to reduce the barriers to opening a bank account.
“Interviewees in that research said banks need to do a better job of serving customers who may be in challenging circumstances. We’ve taken those insights on board and are taking this next step by piloting the basic bank account.”
Westpac engaged closely with the Reserve Bank and consulted with the banking industry to develop the pilot. The bank will take referrals for the pilot from community groups, as well as through Westpac’s Extra Care team.
A basic bank account was one of the recommendations of the Commerce Commission’s Market Study into Personal Banking Services.
“In some cases, these kinds of accounts may serve as a pathway, with some people ultimately able to transition to a regular bank account,” Ms McGrath said.
“For those people who may be on this pathway, we believe it’s important for financial education to also play a part. With that in mind, we’ll be providing financial education resources to people with basic bank accounts, as well as recommending relevant workshops in our Managing Your Money financial wellbeing programme.”
The basic bank account pilot is the latest initiative in Westpac’s programme of work to improve access to banking.
The bank recently worked with the Ministry of Social Development’s (MSD) Youth Service to introduce a new process to support young people to open bank accounts without needing consent from a parent or guardian.
Westpac has also been working with the Department of Corrections to provide bank accounts for newly released prisoners to help them reintegrate into society.
The New Start programme provides prisoners with a debit card and a bank account at the time they are released. Nearly 500 accounts have now been opened through the programme.