Fintech Insider Podcast by 11:FS
00:33:32 · Kate Moody
[00:33:32] S0: It sounds awesome. We'll make sure to include a link to Fintech Connect in the show notes for anyone who wants to find out more and would definitely recommend that you do. Okay. Right. Back to the news. Our final main story this week is taken from FF News, but again, covered in lots of places. Revolut secures landmark New Zealand banking license. Revolut has officially launched as New Zealand's first digital only bank after securing a banking license from the Reserve Bank of New Zealand. The London headquartered fintech is committing 120,000,000 New Zealand dollars to the market over the next five years as it looks to challenge a banking sector traditionally dominated by established players. The license means Revolut can now offer banking products directly to New Zealand customers, starting with an instant access savings account. Eligible deposits of up to a 100,000 NZ dollars will also be protected under the country's depositor compensation scheme. Revolut has been operating in New Zealand since 2023, but the banking license represents a significant step forward, allowing it to compete more directly with traditional banks. It's also part of a much bigger global expansion strategy. Revolut says this is its seventh banking license worldwide and its fifth secured this year alone, with the company now operating as a licensed bank across 34 markets. Obviously very excited to have a New Zealand expert on the show, but we also have another expert, Binu Paul, consultant at SavvyKiwi, who sent us a sound bite. Let's listen to him.
00:34:56 · Binu Paul
[00:34:56] S7: Revolut securing a banking license in New Zealand is certainly big news in the local financial services ecosystem. Clearly another milestone for the business as well, in that it secured another license in this part of the world, having secured one in Australia recently. So this makes Revolut the very first digital only bank in New Zealand. The relevant context here is that for all of these years, the banking sector here has been dominated by four Australian owned banks. Revolut entering the entering the market as a fully licensed bank means genuine digital first competition. I look at it as a technology business with banking services wrapped around it, rather than the other way around. And obviously, there'll be some immediate perks for consumers as Revolut will now be on a mission to sign up new users as well. And as you would expect, getting to this point, which is to get licensed by the Reserve Bank of New Zealand, it's a reasonable commitment for any business. So any business would be facing strict regulatory hurdles, evidence, financial resources, prove their long term commitment to the country. We're looking at local leadership teams and governance teams and the risk management systems and what have you. But I believe Revolut is established as a locally incorporated entity and has committed about $120,000,000 into the New Zealand market over the next five years. And I'm hoping that translates into employment locally as well. And for consumers, what changes is that previously Revolut operated locally as a payments and currency app. Now as a registered bank, it falls under the Reserve Bank's regulatory umbrella. So immediately, customer deposits are officially protected up to a $100,000 here in New Zealand under the depositor guarantee. So it definitely transforms the business from a kind of new age travel card app into a more secure and mature banking provider.
00:36:59 · Kate Moody
[00:36:59] S0: Always a delight to have a Kiwi accent on the on the show. James, come to you first. Obviously, this is an area which, you know, a market that you know super well. How significant is this for consumers and businesses in New Zealand?
00:37:15 · James A. Brown
[00:37:15] S5: Yeah, I mean, back to Binu's comments. Love Binu, by the way. I've won Binu for an awful long time. Fabulous man. He's done great work, not only actually in the New Zealand market but also here in The UK. He spent some time actually consulting to both regulators actually during my tenure at Fintech Insider when we were actually part of the digital team during the free trade agreement discussions between both countries, because we were quite keen to get financial services into the mix because it's traditionally obviously no more about tariffs and sort of like produce. But back to your question, massive, you know, Binu talked about it there, the financial services sector absolutely completely dominated by the Australian banks in the main because they've actually sort of got the capital behind the big brother sitting across the pond. It's easy for them actually to deploy things actually a little bit more quickly than the likes of Kiwibank. Steve Jurkovich, my ex boss, when he was at ASB Bank, I think he had a bit of a vision and ASB was actually sort of, at least in the marketplace, seen as the sort of like the tech first bank. Quite honestly, after Steve left and a number of others, they sort of lost that. It's now the Bank of New Zealand, the BNZ that have got that. But the reality is that some people would look at this and go, but why would they want to go to a country with only 5,000,000 people? It doesn't actually make any sense. It makes sense because they can go in and they can disrupt, but they can also prove the model. I remember speaking to Matt, sort of the CEO sitting in Australia, and you know him saying, we've got plans to move into the New Zealand market. And a number of people around that table at that time were like, exactly that point, why? See, because we actually can come in and make a difference. It's taken them a little bit longer to get there but now they're there, the question I suppose I would be having of all the other CEOs around that table is how are we going to move, how quickly can we move and what are we going to do in order to actually protect our customers from migrating across because there's different ways to also consider this. A lot of people around the world tend to follow what the payments did.
00:39:27 · James A. Brown
So if your parents actually banked with Bank of New Zealand, you probably would have a Bank of New Zealand account at some point. But what we're seeing now, the reality is that you might have that account, but what are you using that account for? And actually then are you using your Revolut historically for your FX? Or now the opportunity to actually use it as a normal, let's call it a normal banking function. And that's the bit that always gets me is when you watch people in sort of the coffee shop or wherever it might be and, you know, they pay by if they still have a physical card or if they pay by phone, what's the app that they're actually using? And, you know, if you spot the accent and the accent's not necessarily local, you might go, actually, they're paying by Revolut or they're paying by Wise because it's easier to actually use that as an FX model. And that was the bit that sort of got me going back probably, what, ten years. There was this phraseology, at least in the APAC region, bundling, unbundling and re bundling of products and services where a lot of the big banks actually started, you know, sifting off the FX division, the insurance division, the wealth division because they started to realise they weren't actually very good at it. What I was surprised though is that they didn't then go out to the market and say, hey, Revolut wise or whoever it might be, you're really good at this, can we figure out a way to actually sort of like coexist? So if I was still in New Zealand, and I do hope to go back there early twenty twenty seven, I think I'd be very excited at this announcement and actually what the prospect will actually bring. The government, you know, when I used to sit with the Prime Minister, she was then just send her down, we need more competition in this landscape. Well, now you've actually got it. The question that's posed to follow-up is, now that they've gone in, will we see others go in? And then what would that actually look like? So the market's been screaming out for years, you know, they've been very dominated, it's been price heavy, which is not in the sort of in the favour of the consumer. Now that you've actually got a new digital first challenger in the marketplace, I think it's fabulous. Like, you know, throw in the grenade, stir it all up and and see what comes of it. So yeah, really excited.
00:41:46 · Kate Moody
[00:41:46] S0: Yeah. Wincie, if you look into your Fintech crystal ball for New Zealand, what impact do you think this will have from your experience of watching how new Fintechs deploy globally?