NZ Inland Revenue explores use of open banking technology –

A government department in New Zealand has issued a request-for-information (RFI) to potentially procure ‘open banking and related technologies’.

Inland Revenue describes its RFI, which was published this week (10 February), as providing interested private-sector suppliers with the ‘chance to help us shape the future of payments using open banking end-to-end API services in the financial industry’.

The move is a potentially significant milestone in New Zealand and also globally as the latest example of a government agency exploring the use of financial technology to improve what they do.

It is an apparent ‘first’ in New Zealand because the department is believed to be the country’s first public sector body to launch an open banking-related ‘go-to-market’ initiative.

The RFI is also a big moment in a global government fintech context. The UK’s HM Revenue & Customs (HMRC) introduced an open banking-powered ‘Pay by bank account’ option (button) for people making online self-assessment tax returns in 2021 – believed to be the first time any government in the world had embedded open banking within its own operations. Global Government Fintech has revealed further examples of UK public sector open banking use since then. But examples beyond the UK of public sector open banking use have, to date, proved elusive despite a growing number of nations and jurisdictions introducing rules and structures to encourage open banking as a concept.

OPEN BANKING: EXPLAINED Open banking, and its sibling concept open finance, are being encouraged by governments worldwide, in different ways and at different speeds, as a means of boosting innovation and competition in financial services. It is a reference to users sharing their data with third-parties. ‘Open’ refers to open APIs: software intermediaries that allow two machines to interact. Global Government Fintech’s focus is on its potential to improve public service delivery.

Three ‘business outcomes’

‘Inland Revenue recognises that through open banking and other technologies there are opportunities emerging to optimise IR and our customer interaction,’ the notice – titled ‘RFI (Market Research) – Open Banking Services / End to End API Services in the Financial Industry’ – explains. ‘As open banking and related technologies continue to evolve, IR needs to keep pace.’

The department is ‘seeking information on open banking and related technologies to help us develop a roadmap for engagement on potential services,’ the notice, released through the New Zealand Government Electronic Tendering System (GETS), continues. ‘We are seeking to understand what services are currently available in the market, and what services are being developed or are anticipated to be developed.’

The notice sets out three main ‘business outcomes’ that it would want to achieve: ‘reduc[ing] risk of us paying to incorrect bank accounts, ensuring money is going to the right place’; ‘reduc[ing] direct debit errors and risk of fraud by confirming bank account ownership before request of payment via direct debit’; and ‘reduc[ing] payment reconciliation errors for incoming payments by helping our customers get their payment details correct (such as tax type and period).’

‘We understand that there are market terms such as “Confirmation of Payee”, “Payment Initiation” and “Bill Presentation” being discussed in different forums,’ the notice continues. ‘We are interested in the availability of these services as well as being open to other open banking services that may be beneficial to IR and for IR’s customers.’

The RFI closes to interested parties on 28 February.

CONFIRMATION OF PAYEE: EXPLAINED Confirmation of Payee (CoP) is a name-checking service that uses open APIs to automatically check names against account information held by payment service providers in real-time, with the aim of reducing errors and fraud. 

Discussions with UK’s HMRC

After launching a first competitive procurement in 2020 (since repeated, in 2024, after the original contract expired), the UK’s HMRC has been using technology supplied by a fintech company, Ecospend, to enable the department to receive tax payments via open banking – a use of ‘payment initiation services’ (PIS) that created a public sector open banking case study.

Seeking to further capitalise on open banking technology, HMRC is also now using account information services (AIS) in situations where the department needs to make payments back to people who pay their taxes via PAYE (Pay As You Earn – HMRC’s system to collect income tax and national insurance payments via employment). HMRC is specifically using AIS to access a customer’s bank account information and payment details (with the customer’s consent) to make what are known in the UK as ‘P800 repayments’: a P800 is a form used by HMRC to let individuals know when they have paid an incorrect amount of tax.

Other UK public sector entities have also been exploring and using PIS and, increasingly, AIS. For example, NS&I (National Savings & Investments) is also working with Ecospend to enable people to make payments (NS&I announced in May 2023 that people would be able to select an HMRC-style open banking-enabled ‘Pay by bank account’ option when making online payments to NS&I); and the Department for Work & Pensions (DWP) is also using an Ecospend AIS tech solution.

IR NZ has sought to learn from the UK’s experience. A department spokesperson told Global Government Fintech this week that the department “regularly meets and discusses matters with other tax offices across the globe and this includes HMRC and open banking.”

The RFI issuance was, the spokesperson said, “part of our commitment to be proactive in understanding market changes and tech innovations to ensure we are always evolving our use of technology to deliver the most efficient and effective services for the benefit of New Zealand taxpayers.” He emphasised that, at this stage, this process is “market research for the purpose of gaining insight into what consumable services may be available currently, and what is in development”.

“Responses to this RFI will determine what, if any, next steps are taken by IR and when,” he added.

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NZ consumer data right on way

Sixty jurisdictions worldwide have implemented legislation or regulations on open banking, while 16 have passed rules implementing the broader concept of open finance, according to the ‘Global State of Open Banking and Open Finance Report’ produced by the Cambridge Centre for Alternative Finance (CCAF) last year.

In New Zealand, which has a population of about 5.3 million people, Payments NZ launched an ‘API Centre’ in 2019. As part of this initiative, the country’s four largest banks – ANZ, ASB, BNZ and Westpac NZ – were required to make an ‘Account Information API standard’ available by November 2024.

But legislation is also on the way. The government is planning to establish a ‘consumer data right’ (CDR – neighbouring country Australia uses the same expression) through a Customer and Product Data Bill, which had its first reading in July 2024 (the Ministry of Business, Innovation and Employment consulted on the bill’s application to banking between August and October 2024).

“The bill lays the foundation for open banking, which will make it easier for innovative start-ups to compete with traditional banks,” commerce and consumer affairs minister Andrew Bayly said last July, adding that “Australia, UK and the EU [European Union] all have, or will soon have, a consumer data regime like what is proposed by this bill. It is time we caught up with the rest of the world and harnessed the benefits of the modern, digital economy.”

New Zealand’s retail banks started rolling out CoP just over a couple of months ago. The New Zealand Banking Association is working with UK-based company obconnect to deliver CoP services.

RELATED ARTICLE Government adoption ‘most important’ ingredient for trust in open banking: UK fintech leader – a news article (29 January 2025) based on a UK-focused discussion in London

CoP-ing mechanisms

In respect of government procurement of CoP services, HMRC recently appointed a new supplier of CoP technology – Modulr, a fintech company – having previously used National Westminster Bank (NatWest) to provide CoP for three years.

Global Government Fintech revealed on 8 November 2025 that the department had hired Modulr through a ‘Open Banking (Data, Digital Payments & Confirmation of Payee Services) Dynamic Purchasing System (DPS)’ established by the Crown Commercial Service (CCS) at the turn of the year with the ultimate aim of ‘reducing the costs of receiving money into public sector organisations, as well as reducing fraud’.

HMRC’s appointment of Modulr was significant from both a public- and private-sector perspective for reasons including that the company’s appointment represented a piece of government fintech business moving from one of UK banking’s biggest names to an emerging player; and that it provided an example of a government entity using the DPS to source a new supplier (and thus also illustrated the advantage to companies of being on the DPS).

The NZ Inland Review Annual Report for 2023-2024 states that its systems ‘automatically screened’ 9.7 million tax returns during the latest tax year, ‘stopped 134,000 returns that did not look right for review and processed the rest quickly’. NZ$230 million (about £104m/US$131m) in ‘incorrect or fraudulent refunds and tax reductions were stopped at the time of filing’ – this was NZ$85m more than the previous year.

New Zealand’s tax revenue for 2023–2024 was NZ$115.4 billion (about £52.3 bn/$USD 65.8 billion) – its highest-ever level – according to the department’s annual report. NZ IR, which is headquartered in capital city Wellington, had a headcount of 4,486 in 2024, up from 3,923 in 2022 but down on 4,831 in 2020.