The report found that this generation is the most proactive with financial management
New Zealand’s banking industry navigated unprecedented turbulence in 2025, with leadership changes at the Reserve Bank of New Zealand, a Parliamentary inquiry into banking competition, and sweeping regulatory reforms reshaping the sector’s future, according to Chapman Tripp’s The banking industry: A look ahead report.
The report identified Generation Z’s coming of age as the single greatest factor driving change in banking services. Born between 1997 and 2012, this cohort demonstrates markedly different financial behaviour than previous generations, with studies showing Gen Z is the most proactively engaged generation in managing finances.
“Gen Z has options – and they know it,” the report’s authors wrote, noting that lower home ownership rates mean fewer mortgage commitments and less gravitational pull to a single bank.
Research cited in the report revealed 30% of Gen Z began investing in early adulthood, compared to 9% of Gen X and 6% of baby boomers. Additionally, 86% of Gen Z had learned about personal investing by entering the workforce.
The regulatory landscape underwent significant upheaval following Adrian Orr’s unexpected departure as RBNZ Governor in March. Dr Anna Breman was announced as the new long-term Governor in September after a 200-day interim period. The transition coincided with the historic commencement of the Depositor Compensation Scheme and a comprehensive capital review.
The capital review, prompted by concerns about competition and barriers to entry, resulted in the RBNZ announcing reduced overall capital requirements for banks. The decision came days after the Select Committee Inquiry into Banking Competition released its report last month.
“The conservative capital requirement settings adopted by the RBNZ in 2019, to be fully phased in by July 2028 and already putting serious pressure on the banking sector, became a battleground,” the report’s authors wrote.
Digital innovation emerged as another transformative force. The Customer and Product Data Act 2025 will apply to the banking sector beginning December 2025, allowing fintech companies to access customer bank data with consent. Minimum bank capital requirements were reduced to $5m, aiming to support fintech participation in the sector.
The report warned of potential vulnerabilities from artificial intelligence integration, including systemic risks from exposure to few technology providers and increases in AI-powered scams. Neither the FMA nor the RBNZ has issued extensive AI guidance, though both regulators indicated the matter remains on their radar, the report noted.
Funding uncertainty also loomed large. According to RBNZ data, deposit funding surged to 90% of bank funding during COVID-19 from around 85% previously and remained elevated. RBNZ assistant governor Karen Silk noted that funding risks had evolved, stating it was “now not only large financial institutions that have the awareness and the means to move their money at short notice.”
The report projected the non-bank lender sector would pursue growth over the next 12 months, whilst warning that longer-term consolidation may occur as scale and breadth of product offerings widen to attract customers.
“We expect that, looking back in five or 10 years, 2025 will be remembered as the turning point when people’s expectations of their banks, and what services they need a bank for, really started to change,” the report’s authors wrote.
The banking industry: A look ahead’s report coordinators were Chapman Tripp partner Luke Ford and senior associates Charlotte Montgomerie and Janko Marcetic.
