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In some respects it would be true to say that most banking products such as simple loans and deposits are easy to replicate. However, it is not so much the complexity of the products themselves, or the difficulty in attracting experienced banking staff, that is the key barrier to entry for new participants.

In New Zealand and throughout the world, large complex banks operate successfully alongside smaller local banks, offering basic banking products to customers. New entrants to the market are limited by the high regulatory barriers and relatively high establishment costs associated with setting up, such as technology. Authorities are extremely careful to ensure that only responsible and respectable organisations can establish themselves in the business of depositing and lending money.

The Global Financial Crisis (GFC) that began in 2008 has demonstrated the impact on economies that did not have strong and robust financial institutions. The issues that have continued to arise from the collapse of institutions, and the regulatory environments underpinning their financial systems, have been severe for many countries, including investors in New Zealand.

Large group of banking staff in uniform standing behind a reception desk at an ANZ Indonesia branch.

The key differentiator within the banking sector is less about the products themselves and more about the ability of a bank to put component parts together to offer a package of effective services, which includes:

  • the levels of service
  • technology
  • product support
  • back office processes
  • risk management and credit analysis.

Banking innovation is therefore more often the result of improvements in technology aligned with changes to the service model that allow products to be utilised by customers in a rapid and more advanced way.

Depositing money into a bank, borrowing it from a bank to invest in a business or mortgage, and using money to pay for goods and services are fundamentally no different today than a hundred years ago. What is very different is the manner in which these can now be done. This includes:

  • the automatic crediting of salaries to bank accounts
  • the ability to withdraw money using debit and credit cards
  • the ability of the bank to analysis a mortgage application and make a loan in days versus months.

Read more about ANZ's journey:

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