PRESS RELEASE - Cook Islands to Investigate the Feasibility of BCI Joining New Zealand Payments System

Cook Islands to Investigate the Feasibility of BCI Joining New Zealand Payments System

Minister of Finance, the Honourable Mark Brown has outlined steps to build on findings from the independent banking review prepared by Sam Knowles in 2012 which outlined that banking in the Cook Islands was at a cross roads and in major need of change.

In his report, Mr Knowles outlined that business customers set their benchmark for the banks by their experience in their banking relationships and functionality in New Zealand. One of the major differences between the countries was the manual payments system which underpinned the domestic banking system in the Cook Islands.

Minister Brown outlined that there was a need to introduce a cost effective way of modernising the payments system in the Cook Islands,

“The current system does need to change for the benefit of the Cook Islands economy.  I have spoken to many businesses in the country and they have to adopt a dual banking model which includes having accounts at all three of the local banks so they can make payments direct to the customers of those banks as well as an account with a New Zealand based bank, so that if they directly purchase services or supplies from New Zealand, they can use that account via internet banking as their primary business account.”

Minister Brown announced that he would be assembling a team consisting of the Financial Secretary, the CEO of the BCI and the Financial Supervisory Commissioner Paul Heckles to commence a process of assessing the feasibility of BCI joining the New Zealand Payments system.

In November, the Financial Secretary, the Chair, CEO and an Independent Specialist Banking Director of the Bank of the Cook Islands (BCI) attended and presented to the PaymentsNZ conference.   During this time there has been a consensus emerging that there is a possibility that the Cook Islands could move to the New Zealand Payments System in a very similar way to what Niue has done.

Minister Brown outlined that “electronic settlements and internet banking have revolutionised the way modern banking is done, creating a major gain in economic productivity. Unfortunately for us this has failed to materialise in the Cook Islands where banks still run on a predominantly manual system especially when effecting customer instructions across banks.”.”

Chair of the BCI, Jessie Sword outlined that the BCI wanted to become more competitive and drive the cost of banking down, “I was impressed with the opportunities that could present themselves at the PaymentsNZ conference, and look forward to seeing what can be done to introduce a more automated system into the Cook Islands.”

The team established by the Minister will look into the feasibility of BCI joining the New Zealand payments system, and report back to Cabinet in the first quarter of 2015.