Open banking concept graphic

Open Banking in Canada: A Mission to Deliver Greater Opportunities to Consumers

Interest in Open Banking is strong in Canada, where conversations center around “consumer-directed finance” and an effort to deliver greater choice, control and personalization in financial services.

An initiative driven by the Open Banking Initiative Canada (OBIC) seeks to regulate the protection of financial data, products and processes. According to the Manifesto published in April 2021, the final step in implementing the framework will be developed collaboratively by industry and government. The organization also confirmed in the same document that this final step is expected in 2022.

Millions of Canadians are already using different financial applications and certainly look forward to the realization of the OBIC initiative mentioned above. They would like to have a secure and convenient way to access different services like loans, mortgages, personal financial management and other services in one place. They are looking for a more personalized, digital and customer focused experience.

The challenge is that today’s model for achieving this experience is mostly done through screen scraping which means that the information the user provides on one device can be used for another purpose. For example, if the user provides their username and password to gain access to their financial data, it can be used to login as well without having to reenter it later on. However, this information being used to automatically log into the user’s bank account without the user having to reenter it could be problematic if the device falls into the wrong hands. The user might be held responsible for any losses resulting from unauthorized transactions even if they didn’t give explicit consent at that time since the login was pre-entered.

This is where Open Banking truly can add value by offering a more secure way to facilitate innovation within the financial industry and empower a better digital experience. By having a common API standard, the industry can provide benefits to consumers and the whole ecosystem. Banking consumers are given the benefit of the right to choose and banks gain the ability to be increasingly customer centric as they can better understand them through data-sharing. Fintech can extend their services for better engagement and be more competitive while the government can ensure that rights and privacy are exchanged in a safe manner.

Some Organizations Move Ahead of the Regulations

Regulations have evolved in tandem with Open Banking developments to reduce risk and protect against fraud around the world. The financial industry however stands at an inflexion point. As offerings expand and consumers demand more customization, choice and control, the companies that win will be those that go beyond regulations to align with customer needs. Those that view Open Banking solely as a technology play will be vulnerable to disruption.

EQ Bank, Equitable Bank’s digital arm, is a good example of such an organization. They have many testimonials from customers on their website that prove just that. Here’s an example: “EQ Bank has shown time and time again that they listen to the needs of consumers and continue to adapt to meet those needs.”

Canada has the opportunity to become a leader in promoting security, consumer choice and establishing a competitive industry landscape through Open Banking. The country has a large FinTech industry, access to private capital and government programs to support the innovation. Some industry watchers, however, believe the country’s delays in developing standards represent a missed opportunity, putting millions of consumers who have already signed up for Open Banking services at risk. Let’s hope that Canada will rise to the occasion.

Want to learn more about Open Banking around the world? Take a look at this eBook that explains how going beyond regulations is what’s required to stay ahead.

Miguel is a Security Consultant for the IAM Consumer Authentication business unit of HID Global for Americas and Sub-Saharan Africa regions. He has worked with numerous financial services providers to solve challenges that financial institutions face from a technology and security perspective. He has a strong technical background in Information Security and System Integration in the financial services market.