Banking transformation: The new agenda

As the global banking industry accelerates its journey toward operational and cost transformation, New Zealand faces new challenges in its banking industry. The sector is preparing for a shift with the introduction of regulated open banking end of 2025 and more regulation on the horizon.

This legislation will empower consumers to securely share their banking data with accredited third parties, fostering innovation, enhancing competition, and enabling more personalised financial services. This regulatory milestone aligns with the broader global trends highlighted in KPMG’s new global report Banking transformation: The new agenda.

The report, based on insights from over 228 banking leaders worldwide, underscores the urgency for banks to modernise their operating models, reduce costs, and improve customer experience. In New Zealand, these imperatives are particularly relevant as banks prepare to implement standardised APIs and data-sharing protocols, moving beyond voluntary frameworks to a regulated, interoperable ecosystem.

The transition to open banking presents a unique opportunity for New Zealand’s financial institutions to reimagine their legacy systems. Many banks are still reliant on outdated core platforms that limit agility and scalability. Upgrading these systems is no longer optional—it is essential for enabling secure data exchange, embedding AI-driven customer insights, and delivering seamless digital experiences.

Cost transformation is not merely about efficiency, it is about strategic reinvention. High-performing banks, as identified in the report, are those with centralised transformation models, clearly defined cost strategies, and aligned leadership. These attributes are critical for New Zealand banks seeking to navigate the complexities of regulatory compliance, digital innovation, and evolving customer expectations.

Moreover, the dual focus on reducing cost to serve while enhancing customer experience resonates strongly in the New Zealand context. As digital channels become predominant, banks must balance automation with empathy, leveraging AI to detect customer vulnerability, streamline interactions, and personalise services. The report’s emphasis on embedding AI into new ways of working and improving data and analytics capabilities is particularly salient for New Zealand, where fintech partnerships and digital sprints are gaining momentum.

New Zealand’s banking sector is entering a transformative era. The convergence of regulatory reform, technological advancement, and strategic cost management offers a rare opportunity to reshape the industry for the better.

We hope this read inspires you and feel free to reach out to us if you want to have a deeper conversation on the topic.

Banking transformation: The new agenda

How leading banks are driving successful operational and cost transformation

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Notable findings

53% of respondents expect to cut costs by at least 10% by 2030

Anticipated cost savings are significant for banks.

Only 24% have been successful in achieving cost reduction goals

Successful transformation has been challenging.

Just 40% consider themselves well-positioned to implement change management or lead transformation initiatives

Not all banks are ready for change.

What are the most successful banks doing differently to achieve transformative outcomes?

They have clearly defined cost objectives

Banks demonstrating successful transformation initiatives set specific, measurable cost goals that align with their broader business strategy.
Their cost and transformation objectives are ‘fully aligned’

These organizations ensure that cost-saving efforts support — not hinder — their innovation and modernization agendas.
They have allocated substantial budgets

Business leaders allocate sufficient resources to ensure transformation initiatives are well-funded and sustainable.
They have made leadership accountable

Executive teams are directly responsible for delivering results, fostering a culture of ownership and performance.

Five key takeaways

Know what you want to achieve

Rather than focusing on siloed cost and transformation initiatives, start by understanding who you want to serve, how you want to serve them and what products and services they will need.
Create alignment between transformation and cost

Be clear about your cost and transformation objectives and help the organisation understand the link between operations and efficiency.
Understand the levers of value

While technology can enable and unlock efficiency and simplification, consider all of your routes to transformation.
Drive successful definition and execution across the enterprise

Whether or not your approach to transformation is centralised, make sure you have a hand in driving results, setting and holding leaders and people accountable, and maintaining visibility to the execution and success of various programs across the change agenda.
Tap into tested experience

Look for support from experienced professionals who can bring tested methodologies and approaches to the table, particularly when seeking to apply new technologies such as generative AI.

How KPMG can help

KPMG's value creation services help businesses identify and capture value using a data-driven approach. We focus on what an organisation needs to change to achieve measurable improvements to revenue, margin expansion, cost management and capital structures. It is value quantified and delivered.

We'd love to chat and discuss how we can help you. Please reach out.