Published on the 07/05/2025 | Written by Heather Wright
Playtime begins…
Six fintechs have gained access to a new Financial Markets Authority regulatory sandbox to experiment with new products and services and ensure they comply with regulations.
The pilot regulatory sandbox was announced late last year, in response to ongoing criticism about the lack of investment, innovation and disruption in the banking and finance sector and cumbersome regulations which are cited as a barrier to entry for fintechs.
“Our ambition is not to have one or two unicorns, but a scalable fintech industry.”
Winning their place in the sandbox are ECDD Holdings, which is part of the Easy Crypto exchange which recently merged with Australia’s Swyftx, and which intends to launch a stablecoin; digital banking alternative Emerge Group; and Homeshare which offers the opportunity to own a fractional share of real estate.
Also among the selected six are IndigiShare, which aims to improve access to capital for Māori entreprenuers and small businesses, offering a koha loan platform; and group investment platform Tandym.
Australian coop Invest In Farming rounds out the list.
Commerce and Consumer Affairs Minister Scott Simpson says the sandbox program will provide benefits for fintechs, consumers and the wider New Zealand economy and help fintechs disrupt the financial services sector.
“For fintechs, it means having the freedom and guidance to develop new products and services that will not only benefit customers but also help them supercharge New Zealand’s economic growth.”
He says he expects the sandbox to save time and reduce costs, enabling companies to bring innovative products – which will challenge traditional banks and boost competition, providing more choice for consumers – to market sooner.
“Fintechs are exactly the kind of high-value companies that we want to see thrive in New Zealand, but regulatory barriers have prevented them from competing on a level playing field,” Simpson says.
The Deloitte 2024 New Zealand Fintech Pulsecheck highlighted those issues in stark black and white, with the report saying fintech’s faced an uphill battle to build partnerships with big banks and a lack of government support.
That’s despite a robust fintech scene, with some fintechs eyeing global markets ahead of New Zealand.
New Zealand’s Commerce Commission has also fired shots at the banking sector, saying more needs to be done to disrupt the four major retail banks.
Daniel Trinder, Financial Markets Authority director strategy and design, says the pilot will enable fintechs to test new products and services in a controlled environment, helping the obtain a deeper understanding of ‘supervisory expectations’.
Being able to adjust a product or service before full commercial launch may also help reduce costs for the companies involved, he notes.
For the FMA, it’s a change to gain greater insights into the benefits and risks of financial innovation and new technologies.
“Experiences gained through such a testing phase should allow us to react faster and more effectively to any potential regulatory and supervisory problems. It should also highlight gaps around investor and customer protection, allowing development of more appropriate and timely solutions.”
In announcing the pilot last year, former Commerce and Consumer Affairs Minister Andrew Bayly said while New Zealand has developed ‘a number’ of world-leading fintech companies it needed to multiply that success several times over.
“Our ambition is not to have one or two unicorns, but a scalable fintech industry that employs Kiwis and exports products and services around the world.”
New Zealand’s fintech sector generated an estimated 2.5 billion in revenue in 2023, compared to Australia’s $30 billion. Australia’s regulatory environment is generally regarded as more conducive to fintech innovation than New Zealand’s and the Australian government has lauded fintech as a major export sector. In 2022, it ranked sixth worldwide and second in Asia Pacific under global fintech rankings.
New Zealand’s fintech scene is however growing strongly. Last year’s TIN (Technology Investment Network) report showed fintech experiencing double digit growth and hitting $2.88 billion. It’s now the largest category in the index by revenue, with big players including Xero, Windcave and Pushpay.
The sandbox pilot, which was open to both startups and established licensed financial institutions, received 24 applications.
Trinder says a ‘thorough review process’ was undertaken to determine participants.
Criteria included genuine innovation, benefit to consumers, low risk of consumer harm, a demonstrated need to be in the sandbox, having a product ready to test, and having a management team with the experience and skills to executive the sandbox testing plan.
The pilot regulatory sandbox follows the recent passing of the Customer and Product Data Act in New Zealand, with banking designated as the first sector under the Act, which sets out the rules for how open banking will work in practice in New Zealand.
The big four banks need to have their open banking systems meeting the new requirements by this December, with Kiwibank given a grace period until June 2026.
Simpson says designating the banking sector was necessary to speed uptake of open banking in New Zealand and will ensure the major banks are not creating unnecessary barriers for fintechs and smaller players.
