The Commerce Commission released its final personal banking report on Tuesday, saying there was little competition in a sector dominated by four Australian owned banks making high profits.
The big banks are ANZ, BNZ, ASB and Westpac.
Finance Minister Nicola Willis yesterday said the government would respond to all 14 recommendations from the commission's long awaited report into banking competition. The commission believes Kiwibank needs to strengthened and open banking must be brought in.
Commission chair John Small said a properly functioning market would have stronger competition and more aggressive efforts to compete for customers.
ANZ New Zealand chief executive Antonia Watson told RNZ's Morning Report programme today it was true bank profits in New Zealand were higher than many places overseas. But they needed to provide reasonable a return to shareholders so they would continue to invest in New Zealand.
"We need to attract that foreign investment. I'd love to be Kiwi owned right - we can't afford to be Kiwi owned. We don't have $50 billion to put the major banks into Kiwi ownership."
Watson disagreed that there wasn't competition between banks, pointing to recent drops in interest rates charged on home loans.
"There is absolutely competition, but can we improve competition? Sure."
The commission's recommendations were "solid" and Watson said she supported them.
The report also said banks had been too slow in developing open banking.
Watson said a lack of regulation was holding things back with open banking.
While other countries, including Australia, were further ahead in that space it was because their consumer data rights and regulators had been established years ago, she said.
"We've been working really hard on open banking... one of the things we've been asking for is regulation.
"We need that consumer data right that makes it really really clear where the liability sits when we are giving other people our customer's data and we'd like an accreditation agency that makes it easier for the fintechs to deal with us."
ASB, BNZ and Westpac declined interviews. Kiwibank also declined, but said it was ready to challenge the big banks.
