The New Zealand government's banking services, which include managing about $450 billion of core agency transactions annually, are up for tender for the first time in more than two decades.
A single contract will be awarded for the core agencies' transactional bank, including the Crown's consolidated cash management process, which has $229 billion worth of credit and $219 billion worth of debit transactions pass through each year, according to the request for proposal. The state will also appoint a selection of banks to provide foreign exchange, merchant facilities and inward payment collection, and card services for all of government, which includes the wider public sector like New Zealand Police, schools and other Crown entities.
"Core banking services for government haven't been tendered for over 20 years and banking trends and technology have evolved considerably during this time," Minister for economic development Steven Joyce said in a statement. "An all-of-government banking solution is part of the wider government procurement reform programme aimed at making government buying as efficient as possible, encouraging innovation, reducing costs and improving competition."
The tender will replace Westpac Banking Corp, but the Australian-owned bank will continue to manage the Inland Revenue Department's Crown banking needs, as the tax collector undergoes a reform programme, Joyce said. IRD's departmental expenses, card services and foreign exchange transactions will fall into the tender.
The Green Party has been agitating for years to have the banking services put to tender, in a bid to reduce the dominance of Australia's "big four" banks in New Zealand's financial services market. The Commonwealth Bank of Australia, Westpac, Australian New Zealand Banking Group and National Australia Bank own and operate the majority of New Zealand banks.
"Our government's banking should be done by a New Zealand bank," said Russell Norman, co-leader of the Greens. "Tendering out the contract should result in better value for money for the New Zealand public. It should have been done years ago."
The RFP comes three-and-a-half years after Finance Minister Bill English flagged an intention to open up the banking contract to fresh bids. The government has been pushing for all-of-government contracts for everything from legal services to advertising, travel costs, office consumables, computers and vehicles in an effort to wring out cost savings.
Government agencies have 7.8 million core transactions annually, with 93 Crown accounts, 78 departmental accounts and 175 trust accounts. The Treasury processes the biggest volume, with $245 billion of cash in and out each year. On a merchant services level, the public sector operates 170 merchant services with $718 million worth of transactions. The state has 7,811 cards on issue across the sector.
The contracts will run for eight years, to be reviewed three years in, with the opportunity to renew for a further three years, and then again for two years.
The Ministry of Business, Innovation and Employment is managing the RFP, which closes in October, with a notice of intent to respond due mid-September and the contract to be awarded May 2015.
(BusinessDesk)