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A Step Forward for Open Banking in Canada

On August 4th, 2021, Canada’s Department of Finance Advisory Committee on Open Banking issued its final recommendations report on establishing the path forward for Open Banking in Canada. This report is an important step forward for Canada, providing the much needed roadmap and certainty to push Open Banking forward and enabling a future that will see Canadians and small business owners own their financial data, as well as allow Fintechs and Financial incumbents to build innovative and personalized products and services.

The Final Report provides Canadians and the financial services sector the long awaited implementation roadmap for Open Banking inCanada, which includes the appointment of an “Open Banking Lead”. Over a timeline of 18 months, the “Open Banking Lead” would be responsible for leading industry working groups, developing proposals, defining rules and systems, establishing an accreditation framework, as well as developing all technical standards. The “Open Banking Lead” will eventually transition to become a government entity that will serve as Canada’s Open Banking authority.

The Advisory Committee’s Final Report also outlines the following in regards to the scope of the implementation roadmap:

  • Federally regulated banks will be required to participate.

  • Provincial Financial Institutions will be allowed to join on a voluntary basis, and new entrants will be allowed to join once they meet agreed accreditation criteria.

  • The initial scope for Open Banking implementation will be limited to read-only activities.

  • All data currently available to consumers and SMEs through their online banking applications or online banking portals and lending products will be included within the scope.

The initial scope will include the reciprocal sharing of data. However, participants would not be allowed to require reciprocal access to data from other participants without a consumer initiating the request – this would prevent banks from insisting on having access to consumer data held by Fintechs (unless expressly requested by a consumer).

Although the final recommendations report provides a lot of clarity for the Canadian financial services ecosystem in regards to what Open Banking in Canada will look like, there are still some important questions that have yet to be answered. In order to have a framework that is inclusive of all stakeholders, specifically Fintechs and other new entrants, common rules that will be defined should govern the system to protect consumer interests on issues such as liability, privacy and data security. Additionally, the “OpenBanking Lead” should also consider what form of accreditation of new participants will look like and what technical standards should apply to ensure that the system is safe, secure, accessible, and easy for consumers to use.

In closing, we are confident in Canada’s future and believe that a Canadian Open Banking framework will be the push forward for Canada to quickly join other first to market countries such as the United Kingdom,Singapore, Australia and Brazil in the evolution of our regulatory environment and eventual adoption of OpenBanking. Although the release of the recommendations report is an important step forward, Canada needs to push for implementation of an Open Banking framework by 2022 in order to catch up with the rest of the world. Additionally, with the exclusion of write access in the initial phases of the implementation roadmap outlined by the Advisory Committee, it is integral that we begin consultations on write access as soon as possible. With other first to market countries introducing both read and write access in their initial phases of Open Banking implementation, understanding how write access will take shape in the Canadian environment will be integral to Canada’s competitiveness on a global scale.

The release of this report is also the culmination of the hard work from many ecosystem stakeholders who tirelessly advocated for Open Banking and the modernization of the Canadian financial services space over the past few years. We see incredible potential forCanada, Canadian consumers and small businesses and the rest of the Canadian financial services sector through the secure financial data sharing enabled byOpen Banking regulation. Now that we have the recommendations report, Canada should quickly step forward towards a more inclusive and competitive ecosystem for Canadian consumers and SMEs through the force of good that Open Banking can bring toCanada.

Download the full report here:

To learn more about OBIC and join the initiative:

OBIC Board Member Quotes On The Recommendations Report

“The release of the Open Banking recommendations report by the Government of Canada’s Expert AdvisoryCommittee on Consumer Directed Finance is a very important first step towards an Open Banking framework that will allow Canadian Consumers andSME’s to control their data and access competitive financial services. The time is now for Canada to push forward to drive innovation and financial inclusion.”

- Michelle Beyo, Board Member, OBIC and CEO, FINAVATOR

“I commend the work the open banking advisory committee has done in incorporating feedback from all sides. The recommendations are thoughtful and fair. We just have to act with haste in implementing them and should aim for 2022.”

- Hanna Zaidi, Board Member, OBIC and Director of Regulatory Research & Development, Wealthsimple

“I am delighted to see that the final Open Banking report from the Advisory Committee has incorporated all participants' feedback and defined the next steps. The committee has done a great job by clearly articulating the scope, participation and timelines for Open Banking implementation inCanada. Time for the industry to join forces with regulators to deliver what's best for CanadianConsumers!”

- Bhupinder Singh Saini, Co-Chair & Managing Director, OBIC

“Now that we have the long awaited recommendations, Canada must quickly move towards a more inclusive financial services system to enhance the welfare of Canadian consumers and businesses and support innovation and economic growth through the force of good that OpenBanking promises for Canada."

- Roy Kao, Board Member, OBIC, and Fintech Executive and Advisor

“The good news is that the advisory committee's review recommends a framework that would allow people to more easily move their own banking data across institutions and decide how they want to share this data with providers. The bad news is they also warn players that they may have to wait multiple years for a formal governance entity and legislative framework to be implemented. But at least it's a start!"

- Eyal Sivan, Board Member, OBIC, Head of Open Banking for Axway and Podcast Host of Mr. Open Banking

“The release of the Open Banking report is a promising step towards unlocking more competition and innovation in Canada’s banking sector.”

- Vass Bednar, Executive Director, Master of Public Policy in Digital Society Program, McMaster University

For further information about OBIC please contact:

Michelle Beyo, OBIC Board Member & CEO of FINAVATOR


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