On 30 September 2025, the Reserve Bank of New Zealand (the Reserve Bank) published a consultation paper on the use of the word ‘bank’ and other restricted words (the Consultation Paper) as part of the transition to the new Deposit Takers Act 2023 (the Deposit Takers Act). This consultation is a key milestone in the modernisation of New Zealand’s banking regulatory framework, which aims to bring all deposit-taking institutions under a single, coherent regime. The Reserve Bank has asked for submissions by 5.00pm on 24 November 2025.
Links to the Consultation Paper and the submission form are available here and here.
Who needs to read it? Why?
As the Reserve Bank is proposing to expand the permitted use of restricted words to include all licensed deposit takers under the Deposit Takers Act, this consultation will be especially relevant to registered banks and licensed non-bank deposit taking entities, such as credit unions, building societies and prudentially regulated finance companies who could be authorised to use the term ‘bank’ once licensed under the new regime. It may also be of interest to those who provide financial services and may seek a deposit takers licence in the future.
What does it cover?
Who can use the term ‘Bank’ now?
Under current legislation, no one can use the restricted words – bank, banker or banking or equivalents in other languages – in their name or branding, unless they are either a registered bank or otherwise authorised by the Reserve Bank. (There is an exception for place names and names of people if not used in relation to a financial institution). In practise, this means that the only financial institutions that can call themselves a bank in New Zealand are the registered banks, and those overseas banks which operate under a Reserve Bank authorisation.
A new regulatory landscape
The Deposit Takers Act replaces the Banking (Prudential Supervision) Act 1989 and the Non-bank Deposit Takers Act 2013, consolidating oversight of banks, credit unions, building societies, and the prudentially regulated finance companies into a single regime. The Act is designed to ensure a sustainable and productive economy by protecting and promoting the stability of the financial system. While its primary focus is on maintaining financial stability, it follows international trends by including an enhanced focus on proportionate regulation to ensure New Zealand has a diverse and inclusive financial sector that meets the needs of all New Zealanders.
What this will mean for financial technology firms (Fintechs)
While the financial services landscape is changing and many fintechs are now providing bank-like services, the Consultation Paper proposes that fintechs and any financial service providers outside the regulatory perimeter of the Deposit Takers Act should be excluded from using the word ‘bank’ in its name or title. The reasoning behind this is to ensure that the public are not misled and are able to identify which firms are prudentially regulated and supervised by the Reserve Bank and those that are not.
The Reserve Bank have stated that it would not be consistent with international best practice and the purposes and principles of the Deposit Takers Act to authorise firms that are outside its prudential perimeter to rebrand as ‘banks’ (particularly if it is not licensed or registered as a bank in any other country).
The Reserve Bank will actively monitor developments in the Fintech industry and in certain circumstances may require particular types of Fintechs to become licensed deposit takers in the future.
Branches of overseas banks
An overseas institution that is not licensed in New Zealand may still be authorised to use the word ‘bank’ in its name or title to ensure its ongoing operation in New Zealand. This will maintain consistency with the existing policy under the Banking (Prudential Supervision) Act 1989 and the Consultation Paper suggests that the Reserve Bank intends to authorise overseas banks already operating in New Zealand by issuing new authorisations under the Deposit Takers Act with broadly the same conditions and scopes.
Rationale for the change
The Reserve Bank's proposal is grounded in three key objectives:
- Consumer clarity: Ensuring that entities using the term ‘bank’ are subject to robust prudential oversight helps consumers make informed decisions;
- Financial stability: The Reserve Bank has assessed that expanding the use of the term is consistent with its mandate to maintain a sound and stable financial system; and
- Competition and innovation: Allowing more institutions to use the term ‘bank’ may help level the playing field, particularly for smaller deposit takers, and support a more dynamic financial services market.
Implementation timeline
The consultation on the use of the word ‘bank’ is open until 24 November 2025. Final decisions will be timed to coincide with the full implementation of the Deposit Takers Act, currently scheduled for 1 December 2028.
Key dates include:
- October 2025 – January 2026: Consultation on exposure drafts of Deposit Takers Act standards
- June 2027 – November 2028: Licensing window for existing deposit takers
- 1 December 2028: Deposit Takers Act standards and new naming permissions come into force
What this means for the sector
The proposed changes have the potential to reshape New Zealand’s financial services landscape. By enabling more institutions to use the term ‘bank’, the Reserve Bank aims to foster greater competition, improve consumer understanding, and ensure that all deposit takers operate under consistent and transparent rules. We will continue to monitor developments and provide updates as the transition progresses.
Our view
We support the Reserve Bank’s proposal to have a consistent approach for all prudentially regulated entities. With the transition to a single regime and the implementation of the Depositor Compensation Scheme which covers all entities under that regime, there does not seem to be any reason why all licenced deposit takers should not be able to refer to themselves as a bank. The term lends legitimacy to an institution and provides a strong incentive for firms to operate within the regime which will support the financial stability objective.
While other businesses may provide bank-like services, allowing these entities to call themselves banks would make New Zealand an outlier internationally and would be out of step with guidance issued by the Basel Committee on Banking Supervision which states that the word ‘bank’ should only be used if an entity is regulated and supervised by a prudential regulator.
What next?
The consultation runs from now until 24 November 2025. Submissions can be made via the Reserve Bank’s consultation portal or by email. The Reserve Bank encourages stakeholders to review both the naming consultation and the companion paper on the regulatory perimeter, which defines which entities will be subject to licensing under the Deposit Takers Act. If you have any questions about the Consultation Paper or would like to discuss any of the points we outlined above, please feel free to contact one of our experts.
This article was co-authored by Simran Bechan, Solicitor in our Banking and Financial Services team.Key contacts
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