New Zealand is reportedly examining competition in the banking sector.
As Reuters reported Wednesday (June 12), the decision to investigate the industry follows a draft report earlier this year which found that New Zealand’s four main banks offered limited competition in the personal banking space.
“Promoting robust competition in the banking sector is vital to rebuilding the economy,” Finance Minister Nicola Willis said in a statement, per Reuters.
The report notes that the finance and expenditure committee of New Zealand will lead the probe and team with a committee that focuses on agriculture to determine the scope of the investigation and prepare a report on rural banking.
“Growing the rural economy is critical to rebuilding New Zealand’s economy and with farmers’ satisfaction with banking services dropping in recent years, it’s critical we better understand the role of bank competition,” Willis said.
The finance committee will hear submissions from banks and may ask the chairpersons and chief executives to appear before the committee, she added.
New Zealand’s agricultural sector makes up a little more than a tenth of the country’s bank loans, Reuters said, citing a central bank report last year.
The four biggest banks in the country — ANZ Bank New Zealand, ASB Bank, Bank of New Zealand and Westpac New Zealand — are all owned by Australia’s “Big Four” banks and account for 85% of mortgage and other lending, and roughly 90% of deposits.
While New Zealand is trying to determine whether its rural residents have proper access to banking services, America’s central bank is warning of “banking deserts” that have emerged in both rural and urban areas.
The Federal Reserve said in a recent blog post that in some cases, “banking deserts” have emerged, impacting 12 million individuals in the U.S. The Fed has drawn up a “map” that denotes where those deserts are.
As PYMNTS wrote last month, these deserts affect some 12 million Americans, and can be found in places where banks are outside a certain radius: two miles for urban communities, five miles for suburban areas, and 10 miles for rural regions.
“Overall, the number of bank branches declined by 5.6 percent from 2019 to 2023,” the Fed noted in a recent blog post.
“By asset size, large banks ($10 billion to $50 billion) and very large banks (greater than $50 billion) had the most closures, dropping by 11% and 12.6%, respectively. Community banks, which have assets of less than $10 billion, increased their footprint by adding 1.1% more branches,” as detailed in the report.
At the same time, broadband is “hard to come by” in 39% of those deserts, which makes it challenging for residents to access digital banking services.