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The Banking Association says there is indeed competition in the market. \xa0

A draft report from the Commerce Commission has found a two-tier system divides smaller banks from ANZ, ASB, BNZ, and Westpac,\xa0as well as a lack of competition.\xa0

It says an apparent focus on profit margins has resulted in under-investment in platforms and low innovation.\xa0

It recommends the Government improve capital for Kiwibank and smaller banks. \xa0

Banking Association Chief Executive Roger Beaumont told Mike Hosking that the commission also recognised the impact of industry regulation. \xa0

He says the regulation banks have been required to do is off the charts and has been a handbrake on innovation.\xa0

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