New Zealand has launched an investigation into competition concerns in the banking sector

New Zealand Finance Minister Nicola Willis said on Wednesday an inquiry into competition in the country’s banking sector would be launched, focusing on services in rural areas.

The decision comes after the country’s competition watchdog said in a draft report in March that New Zealand’s big four banks offer limited competition in personal banking and that a focus on maintaining profit margins has led to underinvestment in technology and limited innovation.

New Zealand’s four largest banks – ANZ Bank New Zealand, ASB Bank, Bank of New Zealand and Westpac New Zealand – are owned by Australia’s “Big Four” banks. Official data shows that they account for about 85% of mortgage and other loans and about 90% of deposits.

“Encouraging stronger competition in the banking sector is essential to rebuilding the economy,” Willis said in a statement.

The Parliament’s Finance and Expenditure Committee will lead the inquiry, along with an agriculture-focused committee to determine the scope of the inquiry and prepare a report on rural banking.

“The development of the rural economy is critical to rebuilding New Zealand’s economy and with farmers’ satisfaction as banking services have declined in recent years, we need to better understand the role of bank competition,” Willis said.

He added that the finance committee will hear submissions from banks and may ask chairmen and chief executives to appear before the committee.

According to a Central Bank report last year, New Zealand’s agricultural sector accounted for 11% of the country’s bank loans.