Online mortgage fintech Dosh co-founder Shane Marsh, told MPs at a Parliamentary banking inquiry follow-up yesterday the central bank had decided it did not meet the legal definition of a bank.
Marsh says the Reserve Bank decided that to be considered a bank, an organisation must make loans as well as offering other banking services.
“We see that that is a relatively narrow and restrictive interpretation of the legislation,” Marsh told MPs, who appeared to be surprised at the decision.
Dosh offers Westpac online home loans with a new addition of One NZ $1,700 reward dollars on settlement. One phone dollar equals one real dollar off the price of a new interest-free phone.
The fintech does not offer mortgage advice and has passed on some of the bank commission it earns to clients who settle loans.
Some advisers have been vocal about this, claiming it can lead to financial decisions that are not good for clients in the long-term. And if there is a proliferation of home loan fintechs offering forms that can be filled in within 15 minutes, with a decision provided within another few minutes, it will eventually decimate their businesses.
Because the home loans Dosh sells are Westpac loans and although it provides savings and transaction accounts, the Reserve Bank did not accept that qualified the fintech as a bank.
Marsh says the Reserve Bank’s definition of a bank is out of step with other countries where there is a recognition that digital banks developed in stages, often starting with deposit and transaction services and later moving into lending.
“Our approach has always been to look at what's working offshore, and how do we bring that to New Zealand to offer better value in a market that, to be honest, has fallen behind, what we're seeing being offered around the world,” he says.
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