A government department in New Zealand is on track to procure open banking technology for the first time, having issued a ‘request for proposals’ (RFP) with a deadline of 8 August for aspirant suppliers.
Inland Revenue (IR)’s RFP follows its issuance of a request-for-information (RFI) to potentially procure ‘open banking and related technologies’ in February, when the department flagged that private-sector suppliers had the ‘chance to help us shape the future of payments using open banking end-to-end API services in the financial industry.’
It has now followed this up with the RFP – issued on 14 July (available in full only via procurement portal Cotiss – account needed to access) – stating that IR is ‘seeking proposals with respect to the ongoing provision and implementation of open banking – bank account validation and payments services.’
As with the initial RFI, the move is a 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.
It 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 application programming interfaces (APIs): software intermediaries that allow two machines to interact. Global Government Fintech’s focus is on its potential to improve public service delivery.
‘Keeping pace’ with technology
‘Inland Revenue recognises that through open banking and other technologies there are opportunities emerging to optimise IR and our customer interaction. As open banking and related technologies continue to evolve, IR needs to keep pace,’ the RFP states (re-stating the RFI).
The RFI had set out three main ‘business outcomes’ that IR was looking 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 original RFI continued. ‘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 RFP has an update on this, stating that ‘responses showed that the “Bank Account Validation” and “Confirmation of Payee” services are best aligned to supporting our requirements.’
‘In terms of ensuring correctness of payments, open banking ‘request-to-pay’ functionality offered alignment to IR requirements,’ the RFP adds.
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.
Multi-phase approach
The RFP states that IR is ‘considering the broader application of open banking services to support its business needs’ but that ‘at this stage we are taking this one step at a time approach to open banking services.’
Its first phase will be to engage a supplier for Bank Account Validation services to support Inland Revenue to ‘reducing payments to and from incorrect bank accounts.’
In the second phase the department ‘plans to extend IR’s leveraging of open banking to payments services, “request-to-pay” and “payment” capability.’
‘IR is likely to progress the implementation of open banking services that will reduce customer payment errors. The service information and pricing requested in this RFP process will support IR’s planning on when and how to implement this initiative,’ the RFP states.
The RFP states that IR ‘has a strong preference for commercial off-the-shelf SaaS [software as a service] and outsourced managed services’, explaining that it ‘do[es] not maintain large in-house IT teams.’
It adds that the award of a contract for ‘open banking – payments services’ is dependent on a supplier ‘being able to meet our requirements and an approved business case allowing us to proceed.’
More broadly, it states ‘whilst at face value we are looking at engaging services to support bank account validation and payments, we recognise that open banking provides for innovation opportunity and there may be other problems that can be resolved through such services.’
SaaS: EXPLAINED SaaS is a way of delivering software over the internet (instead of installing and maintaining software on computers, users access it online via a subscription).
Different order to UK’s HMRC
IR’s planned phased approach to using open banking technology is similar to that taken by the UK’s HMRC – but in a different order.
After launching a first competitive procurement in 2020 (since repeated, in 2024, after the original contract expired), HMRC has been using technology supplied by a fintech company, Ecospend (which re-won the contract and has been owned by Sweden-headquartered Trustly since 2023), 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) has been looking for a ‘strategic supplier’ of open banking tech for Universal Credit (DWP dipped a toe into open banking last year, engaging Ecospend for AIS proof-of-concept activity).
IR NZ has sought to learn from the UK’s experience, with a department spokesperson telling Global Government Fintech in February that the department “regularly meets and discusses matters with other tax offices across the globe and this includes HMRC and open banking.”
RELATED ARTICLE NZ Inland Revenue explores use of open banking technology – a news article (14 February 2025) on the department’s RFI
NZ CDR in force
New Zealand’s retail banks began rolling out CoP last year. The New Zealand Banking Association is working with UK-based company obconnect to deliver CoP services.
The NZ Inland Review Annual Report for 2023-2024 stated 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. The country has a population of about 5.3 million people.
The government has established a ‘consumer data right’ (CDR – neighbouring country Australia uses the same expression) through the Customer and Product Data Act 2025, which came into force on 30 March 2025. The first sector designated under the act is banking, with regulations expected to in force from December 2025.
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.
RELATED READING How can open banking be useful to governments (and the public sector)? – check out our short guide (most recently updated on 20 December 2024)
