Banking wasn’t a tough nut for Brazil to crack - NZ should learn from it
Sunday, 24 May 2026
If New Zealand wants cheaper loans and better banking experiences, it should learn from Brazil, the Commerce Commission’s Competition Matters conference heard recently.
A little over a decade ago, Brazil’s lawmakers had had enough of its incumbent banks’ stranglehold on banking, and their failure to create the conditions Brazilians needed to prosper.
Brazil’s problem was the “unbanked”, a term for people shut out of mainstream banking, often poorer, less well-educated people living more marginal existences on the edge of society.
The conference heard New Zealand’s problem was quite different. It suffered from high lending rates and foreign-owned banks’ OECD-high profits, which transferred wealth through dividends to Australian shareholders.
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But Brazilian Fernanda Garibaldi from Zetta, an industry association for new banks and fintechs, believed the medicine that improved the health of banking competition in Brazil would work in New Zealand.
“Competition in the financial system is crucial for improving service quality, pricing, innovation, efficiency and inclusion,” she said, speaking earlier this month to delegates to the Competition Matters conference at SkyCity’s International Conference Centre in Auckland.
She said many countries were now striving to boost competition, and increase customer choice, particularly by encouraging the rise of fintechs and digital neobanks.
Neobanks are digital-only banks, which are generally cheaper, easier to access but do not operate large branch networks.
It was possible to allow neobanks to flourish while protecting the stability of the banking system, Garibaldi said.
Studies over the past 15 years had shown that competition could enhance the stability of financial systems, she said.
But the rise of challenger neobanks in Brazil had not been by accident. Brazil had designed regulations and laws to allow them to launch and flourish.
This was “purpose-led” regulation, with the purpose being to boost competition.
Brazil had also done something New Zealand had not, which was to recognise that digital infrastructure, like the payments system, is critical national infrastructure like roads, rail and bridges, not just the private property of banks.
Brazil had an anti-trust authority which shared responsibilities with the Brazilian Central Bank for promoting competition in the financial sector, Garibaldi said.
In New Zealand, the Reserve Bank is the guardian of financial stability but is not a competition promoter, and is blamed by some fintechs for holding back the development of competition by not giving banking licences to fintechs to allow true neobanks to emerge.
In 2013, desperate to improve access to banking, Brazilian lawmakers passed laws allowing new types of financial entities to be licensed.
Soon the neobanks and other fintechs which benefited from this expanded from transaction and savings accounts into making loans. This led to increased competition in the lending market, and contributed to a decrease in interest rates for borrowers.
By 2022, concentration in the banking sector had fallen by 10%, and nearly 50 million unbanked Brazilians gained access to banking services.
Garibaldi said the quality of digital banking services improved.
On the University College London map of digital infrastructure, Brazil is coloured green showing it has advanced payment infrastructure. New Zealand has just been promoted from the grey zone in which parts of Africa remain, to yellow, which designates a country that have a digital infrastructure deficit, such as lacking real-time payments.
“A recent International Monetary Find study acknowledged that the growth of fintechs contributed to the decrease in interest rates for end consumers in Brazil,” she said.
The OECD says to get money flowing round the economy, bank profits in New Zealand have to come down and their stranglehold on lending has to ease.
David Haugh, the OECD’s desk head for New Zealand, said: “Obviously, if the banking system is foreign-owned, and is making large profits, they're being transferred to its owners outside the country. That's profit that's not being recycled necessarily back into New Zealand.”
New Zealand has some of the highest borrowing rates for small and medium-sized companies in the OECD, he said.
“A key issue for making the New Zealand economy work better is to reduce the profitability of banks in the country, unfortunately for the banks.”
He said lawmakers should ask fintechs like Revolut and Starling Bank what they needed to challenge the banks here in New Zealand.
A key message of the conference was that New Zealanders weren’t aware of how behind on some measures New Zealand was, with banking and power prices being two things on which the country had slipped dramatically compared with international peers.
Haugh said after two decades of weak productivity and weak competition, New Zealand must heed the message that: “In a small, remote economy, competition does not emerge organically. It must be designed.”
Bryan Chapple, one of the commission’s commissioners, said: “It’s fantastic to hear the Brazilian story, and see the transformation that is possible with really carefully designed regulations to generate more competition.”
Commission chair John Small put a name to this concept: Competition Policy 3.0 ‒shaping markets to enable new forms of competition.
Whether New Zealand has it in it to do that, is yet to be seen.
In the energy sector it might, with NZ First saying breaking up the gentailer power companies ‒ which sell power to households, and control power generation ‒ is its number one priority in coalition negotiations to form the next government.
On banking, progress on open banking is still being made, but the lack of neobank licensing remains a block.
And, anti-monopolist and 2degrees founder Tex Edwards told the conference, it would necessitate New Zealand rejecting the “cognitive surrender” to neoliberal ideas that had allowed competition to stagnate in New Zealand.
Just days before the Competition Matters conference, the commission had published research covering a 22-year period ending in 2023, indicating little headway on increasing competition from current policy settings in many crucial industries including banking, insurance, and the power sector.