Locals are set to benefit from a more competitive banking sector, as the Government vows to act on all 14 recommendations from the Commerce Commission's report.

Finance Minister Nicola Willis says the current market is uncompetitive, with Kiwis facing higher prices and poorer service.

The report criticises the "cosy pillow fight" between the big four banks, prioritising profit margins over customers.

The Government plans to inject competition by supporting Kiwibank's growth and exploring options for raising new capital.

Treasury will engage with Kiwibank's parent company to discuss proposals, including investment from KiwiSaver funds.

Additionally, the Reserve Bank will be tasked with emphasising competition in its policies and actions.

Commerce and Consumer Affairs Minister Andrew Bayly highlights the Government's swift action, scrapping overly prescriptive regulations and implementing "open banking."

This move aims to promote disruptive competition, making it easier for Kiwis to find tailored services and innovative start-ups to challenge established banks.