The introduction of open banking in Canada will change how this country’s banks work with one another and with other players in the financial services ecosystem. It will also be a major transformation for customers as the banks, financial technology companies (FinTechs) and other service providers will be able to introduce innovative products and services based on open access to data.
What is open banking?
Essentially, open banking refers to the opening of internal bank customer data and processes to other parties through digital channels. It can include the secure sharing of customer-authorized financial data with third parties or the distribution of partner-based products, such as those created by technology companies like Apple Inc., to bank customers. Open banking offers many possibilities to improve financial services and the customer experience, ranging from more straightforward uses like account aggregation and facilitating client identification to a host of creative products and services to solve customer pain points.
Many of the ideas behind open banking have been around for some time, but it has only been in the past few years that policy-makers have started introducing regulations to move the issue forward. A number of jurisdictions, including the United Kingdom, the European Union and Australia, are now leading the way on the opportunities offered by open banking.
In January 2019, the advisory committee released a consultation paper that reviewed the merits, potential benefits and ways to manage the possible risks of open banking. The paper is now seeking views on some of those issues as the advisory committee moves toward looking at implementation questions ahead of its report to the Minister of Finance.