Financial Inclusion

Financial inclusion is an important feature of a financial system that supports economic participation and prosperity. Financial Inclusion is one of five priorities for the Council of Financial Regulators (CoFR).

What is financial inclusion?

We have adopted the World Bank definition of financial inclusion for the purposes of our shared work as CoFR: “when individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way”. The ability for New Zealand firms and consumers to access appropriate financial products and services is an important enabler of a modern, efficient and inclusive financial system.

For example, having access to affordable capital can unlock the potential of small businesses to grow and thrive¹, and having access to a bank account enables people to safely receive, store, spend and save money.² We also note that financial products and services, when not well suited to someone’s needs, can harm financial health and wellbeing (for example, promoting access to credit at any cost, irrespective of the financial situation of consumers).³ Our vision for financial inclusion is:To improve consumers’ and firms access to financial products and services that meet their needs.

CoFR agency roles and responsibilities relating to financial inclusion

A community of staff from across CoFR members and relevant partner agencies (such as the Ministry of Social Development and Te Ara Ahunga Ora) meet regularly to:

connect between our agencies to clarify our roles, responsibilities and work programmes relating to financial inclusion.
learn from the experiences of community organisations, academics, and private sector leaders to identify emerging financial inclusion opportunities.
identify gaps in the system and strategic priorities where we can deliver positive, tangible improvements to promote an inclusive financial system.

The diagram below outlines the various roles and responsibilities of each agency.

Figure One: Council of Financial Regulators Financial Inclusion diagram.

The priority for the CoFR Financial Inclusion Community of Practice in 2023 was to learn from the experiences of academics, industry leaders, and community organisations to identify key financial inclusion opportunities and challenges. The diagram below outlines key stakeholders in Aotearoa New Zealand, noting that examples are indicative only and not intended as an exhaustive list.

Figure Two: key stakeholders that contribute to financial inclusion.

Our engagement in 2023 helped our Community of Practice to identify two priorities that we intend to explore over the coming year: access to basic transaction accounts and Māori access to capital.

Access to basic transaction accounts

Having an account at a financial institution (bank account) is a foundational entry point into the financial system. Having a bank account enables economic participation and a means to receive, store, save and spend money.

According to World Bank data, there has been an increase in the unbanked population in New Zealand since 2014.⁴ This decline is particularly pronounced for youth and those not in the labour market. Figure Three below uses World Bank data that estimates the number of people (aged 15+) who did not have a bank account in New Zealand between 2011 and 2021.⁵

Figure Three: Estimated population (age 15+) without an account at a financial institution in Aotearoa New Zealand. Source: World Bank Findex Database⁶ and Statistics and New Zealand National Population Estimates.⁷

The issue of access to bank accounts has been salient in our engagements with stakeholders so far, with mounting research on the impacts that not having access to bank account has on people’s lives, wellbeing and integration in society.⁸ Access to bank accounts issues were also highlighted in the Commerce Commission’s personal banking services market study draft report.⁹

We have looked at overseas case studies to consider how other jurisdictions have approached this issue. We note the experiences of Sweden, Denmark, France, Ireland, Australia, Canada and the UK, where a universal right to a basic transaction account has been legislated by Government or codified in binding industry code.

Issues Paper: Access to Basic Transaction Accounts

CoFR has released a joint Issues Paper that explores the concept of basic transaction accounts as a potential mechanism to improve financial inclusion.

View the full issues paper on access to basic transaction accounts.

The CoFR issues paper summarises the problem we have identified, international best practice approaches for improving access to basic transaction accounts, and opportunities in New Zealand.

The primary problem that we see is that there is a significant unbanked population in New Zealand. The World Bank estimating that around 51,000 adults in New Zealand do not have a bank account, more than double their estimate of the number of unbanked adults in 2014.

We have also drawn on a wider set of evidence to inform this work, including research from Community Organisations, international evidence and a survey that was undertaken directly with frontline banking staff. On balance, we see that issues with opening bank accounts can impact people in a wide variety of circumstances, including recent migrants, young people, rural/remote communities, not-for-profit organisations, older people, and people living with disabilities.

Internationally, we see that basic transaction accounts are designed to be easier for people to open and use but has reduced features. We found that it is relatively common for countries to have basic bank accounts to ensure that everyone can open a transaction account regardless of their circumstances or background. A World Bank survey of global payment systems found that 83% of participating countries have already introduced basic transaction accounts.

We are now seeking input from stakeholders on pathways for action in Aotearoa New Zealand. We are testing which deposit takers want to help to design and implement basic transaction accounts to better serve customers and make basic transaction accounts widely available.

Westpac NZ has begun to pilot a basic bank account with the aim of improving access to banking services. We would like to see other banks pilot basic bank accounts, as an important contribution to financial inclusion for underserved and excluded customers.

The release of the CoFR Issues Paper provides the industry and the public with an opportunity to share their views on basic transaction accounts. We have allowed eight weeks to gather feedback, and welcome input from stakeholders across the financial sector, as well as communities more broadly who are affected by this issue. The link to submit your feedback on options for making basic transaction accounts widely available can be found here:

Reserve Bank of New Zealand - Citizen Space

The deadline for submitting your feedback on this Issues Paper is 18 June 2025. We welcome the views from a broad range of stakeholders who are interested in this topic.

More information

Link to the Appendix of the Joint Issues Paper

Māori access to capital

Access to affordable capital enables businesses to invest and therefore expand, diversify, hedge risk, and thrive. Māori businesses are constrained by the barriers they face accessing capital, and the difficulties they face leveraging existing assets.¹⁰

Several gaps exist in the data around Māori access to capital, Māori businesses, and the Māori economy more broadly to inform evidence-based decisions that support strong outcomes. A lack of capability to work with and understand Māori business models and values, and whenua Māori lending arrangements may be informing misconceptions around the risks involved with lending against whenua Māori, a mismatch of products and services, interest rate premiums, and low responsiveness to Māori business needs.

We intend to continue to work with regulated entities to improve Māori access to capital and build more robust data. We have expectations that the banking industry is supporting Māori access to capital through:

capability building (understanding Māori business value propositions and whenua Māori lending arrangements);
ensuring the treatment of risk reflects actual risk; and
collecting more robust data.

We anticipate that focusing on these foundational steps will contribute to industry development of innovative products and services that better meet the needs of Māori businesses.

We look forward to further engagement with our key stakeholders in 2024 on these topics, acknowledging that important work is already underway in many cases.