June 1st, 2021
Hon. Chrystia Freeland
Minister of Finance Canada
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario K1A 0G5
Dear Minister Freeland,
Open Letter: Releasing the Open Banking Recommendations Report
Since the conclusion of the Department of Finance’s consultation on the proposed Open Banking framework released in December 2020, there has been a delay in the release of the recommendations report outlining the path forward for implementation. In order for meaningful and positive change to take place for Canadian consumers and small businesses, we ask for the support of the Department of Finance Canada and that the second report from the Advisory Committee on Opening Banking be publicly released by the end of the summer of 2021.
We write this letter to you as concerned ecosystem stakeholders and on behalf of our members as well as Canadian consumers and small businesses owners, who would significantly benefit from increased competition, opportunities for growth, and the ability to recover from the COVID-19 pandemic with the implementation of an Open Banking framework in Canada.
Canada has fallen quickly behind other countries in their development of an Open Banking standard, with nations such as the United Kingdom, Singapore, Australia and Brazil far ahead in regard to the evolution of their regulatory environment and adoption. The release of the recommendations report will be a critical next step in helping the Canadian financial services industry and its stakeholders have a clear view and understanding of the Government's recommendation and support for an Open Banking framework in Canada. There is currently a wide spectrum of possibilities for what an Open Banking framework could look like within the Canadian context, including our current light industry-led approach, to a comprehensive government mandated framework and accreditation process.
As stakeholders with a unique position in the Canadian market, we can attest to the speed of innovation and change currently taking place. Industry players such as traditional financial institutions and FinTechs are currently negotiating data agreements, bilateral agreements, and leveraging screen scraping without the use of guardrails to dictate how best to protect consumer data or provide recourse for the worst-case scenarios. In a recent CBC investigation, it was found that banks were increasing bank fees during the pandemic despite profits; Open Banking creates fee transparency, discouraging such behaviours. Open Banking will also help to create a more even playing field for other ecosystem stakeholders as well as provide Canadians with more choices when it comes to their financial products and services.
With the release of the Federal Budget on April 19th, 2021, we were hoping to see Open Banking included in the 2021 Federal Budget, as it is a critical aspect of the future of financial services in Canada. We are deeply concerned with the lack of an established Open Banking framework in Canada and the seemingly unprioritized value of Open Banking by the Department of Finance Canada, especially after a round of industry consultations and promising signals from the Canadian Government.
Given the slowdown in policy work during the summer and the prospect of a fall election, Canada runs the risk of another year without federal guidance on Open Banking. This prolongs the risk of Canadians sharing their financial data insecurely and increases the risk of negative regulatory arbitrage. We see incredible potential in a post-pandemic digital economy for Canadian consumers and small businesses through the secure financial data sharing enabled by Open Banking regulation. Canada is running out of time to develop globally competitive financial services innovation without federal guidance. The time is now to prioritize policy work on an Open Banking Framework.
Two years ago, a report deposited in the Senate of Canada stated:
“Canadian consumers need open banking regulations as soon as possible for three main reasons: to keep their personal financial information safe; to be provided more choice and improved financial products and services; and to help keep the Canadian financial sector strong and internationally competitive...we also recommend that the Government announce a bold, clear and concrete timeline for delivering consumer-directed finance. As a form of guidance, the Committee notes examples of other jurisdictions suggesting that a time frame of one to two years is reasonable.”
Open Banking: What it means for you, June 2019 Standing Senate Committee on Banking, Trade and Commerce Senate of Canada
These comments were shared in the report “Open Banking: What it Means for You” from June 2019 by the Standing Senate Committee on Banking, Trade and Commerce Senate of Canada. By your own assessments, 1-2 years was an appropriate timeline. Without immediate action, starting with the release of the recommendations report, this target will be missed and the patience of an already frustrated financial sector will continue to wane.
In closing, the OBIC Board of Directors and the Department of Finance share a common goal in wanting to create sustainable economic and security policies and programs for all Canadians. We are confident that by partnering together we can find a mutually beneficial path forward for all stakeholders and are here to support in any way we can. As subject matter experts, we are at your disposal to discuss any of the topics brought forth in this letter and we look forward to the opportunity to do so.
You can reach our Board Member Michelle Beyo at email@example.com
The Open Banking Initiative of Canada (OBIC) Board of Directors
Advantages of Open Banking and other information collected by OBIC:
Financial inclusion for those marginalized and unbanked due to established financial service practices.
Increased choice and simplicity for consumers in selecting products and services from a number of FIs by providing anonymized access to financial data.
Consumers paying lower fees due to increased transparency and reduced friction.
Increased access for small businesses to innovative tools needed to grow in a digital age.
Real data for small business owners can give them control, reduce financial stress and simplify time consuming administrative tasks.
Reduction in fraud related to payments.
New API models can offer the ability to obtain enriched data from FinTechs to gather deeper insights into consumer habits.
Increased market competition.
Foster innovation and entrepreneurship.
OBIC Open Banking Insight Series:
OBIC has the pleasure of discussing the benefits and challenges of Open Banking along with Series moderator independent Senator Colin Deacon on our ten episodes with a diverse group of Canadian and UK (Banks, FinTechs, Venture Capital & Government Organization) representatives as guests.
OBIC Open Banking Manifesto: available for download at www.obicanada.ca
OBIC Board Member Quotes On Open Banking:
“Being the focal point for Consumer-Directed Finance in Canada, we here at OBIC believe that Open Banking can help all Canadians in their financial livelihood, especially the 48% of us that are $200 or less away from insolvency at the end of each month.”
- Christian Clapton, Executive of OBIC
“Unsecure Open Banking currently has over 4 million Canadian’s using FinTechs to access more affordable financial services. Consumers deserve the rights to their data in a safer and more secure way through API’s vs screen scraping. The time for Secure Consumer-Directed Finance in Canada has to be now.”
- Michelle Beyo, Board member OBIC and CEO Finavator
“Without clear guidance for fintechs on what Open Banking or Access to the Real Time Rails will actually look like in practice, fintechs will be stuck between a rock and a hard place. They’ll be subject to more regulation, an uneven playing field and no access to financial services infrastructure needed to make our financial services globally competitive.”
- Hanna Zaidi, Board Member, OBIC and Director of Regulatory Research & Development,
“Open Banking can help to reinvigorate Canadian economy out of the pandemic as it will foster opportunities for investments and create new financial services that are fair, competitive and inclusive. Delay’s to Open Banking will lead to sub-standard financial services for citizens and loss for Canadian fintech’s to compete in the global market of Open Banking based products.“
- Bhupinder Singh Saini, Co-Chair & Managing Director, OBIC
“Open Banking has now become a global phenomenon. Regions who embraced Open Banking early, including Europe, the UK & Australia, are now reaping the rewards in the form of thriving fintech ecosystems, increased banking innovation and consumers who are better served by their banks.
Canada is home to that rare combination of incredible technology talent, strong digital adoption and a globally-trusted banking sector. By leveraging these strengths, aligned under the right federal guidance, we have the potential to become an Open Banking leader - the time to act is now.”
- Eyal Sivan, Board Member, OBIC, Head of Open Banking for Axway and Podcast Host of Mr. Open Banking
"Since the late 2010’s, countries around the globe have been implementing frameworks for sharing consumer financial data, conditional on consumer consent of course, while Canada continues to wait on the sidelines and our businesses and citizens fall further behind. I joined the board of the OBIC to help guide leaders in finance, technology, and regulation, to reverse this trend and provide Canadian business and citizens with the tools necessary to succeed."
- Patrick Barr, Board Member, OBIC and Government Relations, CCUA
“An Open Banking Framework will help credit unions, banks, fintechs, and other financial services providers understand the rules of Canada’s financial data sharing ecosystem for the next several years. By announcing a framework, stakeholders can begin to prepare their technology for consumers and innovate within the boundaries of the framework. Canadian consumers and businesses stand to benefit greatly from Open Banking enabled products and services.”
- Kevin Morris, Board Member, OBIC & Strategy and Program Director for LCUC
“Having a made-in-Canada Open Banking framework provides all Canadians increased adoption of innovative financial products and services, and ensures homegrown Canadian Fintech innovations and innovators continue to thrive and shine on the global stage from right here in Canada. These innovative products and services also deliver to Canadians, particularly those that are underbanked, vulnerable, and underserved in the current legacy financial system, opportunities for improved financial literacy and inclusion to bolster the quality of their financial lives and eradicate predatory lending and business practices.”
- Roy Kao, Board Member, OBIC, and Fintech Executive and Advisor
“I’m honoured to be part of an initiative that’s dedicated to spurring financial innovation for the benefit of Canadians.”
- Tara Wilson, Board Member, OBIC and COO, Income Access, A Paysafe Company