Kiwibank not after Govt business

RICHARD MEADOWS
Last updated 13:47 21/06/2013

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While Kiwibank isn't ready to make a bid for the Government's lucrative banking contract, it's still hoping to pick up some work around the edges.

A discussion paper published by Treasury and the Ministry of Business, Innovation and Employment (MBIE) proposes to tender the contract for the first time in 24 years.

The Green Party and others have suggested that state-owned Kiwibank would be a logical successor to Westpac, which holds the master contract.

"It's a huge contract, and we just don't have that infrastructure yet," said communications manager Bruce Thompson.

"There's ambitions in that direction, but that's part of the long haul." However, that doesn't mean the little green bank will be left completely out in the cold.

The MBIE discussion paper said the arrangement with Westpac no longer covered the Government's current and future needs.

It proposes replacing core banking with an "all-of-government" solution, which would leverage the entire state sector's purchasing power to get better value for money.

The core banking functions would be ring-fenced, while it is understood a range of subcontracts could be awarded to cover different areas of service.

Thompson said that might provide peripheral opportunities for Kiwibank.

"It's really small steps, rather than a giant leap," he said.

"We're not ready to go for the core contract, but we're certainly interested in expanding around the edges."

With more than 91 million core transactions alone processed by Westpac in the 2012 financial year, the scale of the main gig is huge.

The only other contenders with a strong enough credit rating and back-end processing power are likely to be the big Australian banks, all four of which have now confirmed their intentions.

The biggest of the local banks, ANZ, has thrown its hat in the ring, as has the Bank of New Zealand.

ASB executive general manager commercial and rural Steve Jurkovich said his bank "would certainly be interested in participating in any tender process that may occur as an outcome of these discussions".

ASB is owned by the Commonwealth Bank of Australia.

The incumbent Westpac said it "welcomes the opportunity to participate in any process that allows us to further demonstrate our capability and the value we deliver to Government".

The review comes more than two years after Finance Minister Bill English indicated he would run a procurement process for government banking.

Public service departments, state service agencies, about 2500 schools and the wider public sector are all eligible to be included in the all-of-government contract.

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The tender document will be released in September or October this year, with the contract awarded in May or June 2014.

MBIE and Treasury have called for submissions on the document to be made by July 4. 

- BusinessDay.co.nz

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