Story: Banking and finance

In the 2000s it is hard to function without a bank account, and almost everyone has one. There are many banks and other financial institutions in New Zealand, but all of the major banks are Australian-owned.

Story by David Tripe
Main image: Bank of Auckland £1 note from 1865

Story summary

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Banks look after money for people who want to save, and lend money to people who want to borrow. Other financial institutions can also do this.

Early banks

New Zealand’s first banks were set up in the 1840s. Some banks from the 1800s survived into the 2000s, such as the Bank of New Zealand. There were quite strict laws that set out what banks and other financial institutions could do.

Changes from the 1980s

In the 1980s there were law changes that meant banks and other financial institutions needed to be more competitive. Many banks merged and were bought by overseas companies. By the 2000s most banks in New Zealand were Australian-owned.

Non-cash payments

As well as lending and borrowing, banks allow people to pay for things using non-cash methods such as:

  • cheques
  • EFTPOS (electronic funds transfer at point of sale)
  • credit cards
  • direct credit and direct debit.

Bank profits

Banks and finance companies make their money by charging higher interest on money they lend than the interest they pay on money they borrow. They also charge fees for some services.

Working in banks

Before the 1980s the structure of each bank branch was quite rigid. The manager made the big decisions. Few women worked in banks, and those who did had little opportunity for promotion.

During the 1980s technology changed, the head offices of banks became more important and call centres handled many customer inquiries. As more transactions were carried out electronically, rather than in person, many branches closed.

How to cite this page:

David Tripe, 'Banking and finance', Te Ara - the Encyclopedia of New Zealand, (accessed 14 June 2024)

Story by David Tripe, published 11 March 2010