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Open Banking

Open Finance

The world’s second-largest country by area is poised to open up its banking data.

94% of Canadians have fixed broadband access (as of 2020), with 72% of those with access reporting download speeds of 50 megabits per second. The Canadian Government wants this benchmark speed available to 95% of Canadians by 2026, as it is felt that this speed is suitable for enhanced online activities. As we move away from metropolitan areas, home internet access drops from 95% to 88%, and as age increases, the internet usage drops (from 92% of the average Canadian, to 62% of over 75 year olds).

2021 survey investigating Canadian attitudes towards their data security showed that ensuring their personal financial data remains private (94%), that protecting their personal finance from fraud (94%) and that managing their personal finances (93%) are important issues. 40% of Canadians were worried about the use of their personal financial information by their financial institution (residents of Quebec, at 58% were most concerned).  Almost half (44%) of Canadians used online banking, with 80% thinking their financial institution kept their financial data safe. 40% of Canadians already use digital wallets, with 19% open to using them in future.

API enabled Open Banking products are not yet widely available in Canada as there is currently no agreed framework in place. The 2018 budget announced a governmental review of the future of Open Banking, and in January 2020 the report from the Advisory Committee on Open Banking was released.  It proposed that industry and government combined to develop a framework to introduce Open Banking to Canada.

In April 2022, the Canadian Department of Finance appointed its first Open Banking Lead, who is tasked with developing and implementing the country’s Open Banking regime. Alongside this effort, the Financial Data Exchange (FDX) is developing the potential for use of its API standard for Canada and is complementary to the Department of Finance’s ongoing consultation on secure consumer-directed finance in Canada. The CIO Strategy Council has been inviting national stakeholders to provide input on a draft national standard for Open Finance.

By 2023, the Canadian Government hopes to have the initial phase for its Open Banking framework operational. They aim to pursue a hybrid approach, with government and industry collaborating. Three core fundamental elements would encompass common rules to protect consumers, an accreditation framework for third-party providers and technical specifications for data transfer. This way, they hope to give consumers confidence.

The Digital Charter Implementation Act, 2020, set out how Canada would regulate the collection, use and disclosure of personal information for commercial activity. The aim was to modernise the rules in the face of impending Open Banking, and set regulations about how consumers have a right to control, edit, manage and delete information about themselves.

Canada’s financial services industry is highly concentrated within 5 banks: The Royal Bank of Canada, The Toronto-Dominion Bank, The Bank of Nova Scotia, The Bank of Montreal and The Canadian Imperial Bank of Commerce, which combined, hold around 92% of customer deposits. 

Only 7% of Canadians have heard of Open Banking or consumer directed finance and 59% of potential consumers fear that Open Banking may make them more vulnerable to fraud.

In April 2021, the Final Report of the Advisory Committee on Open Banking was released. In it, the authors highlighted concerns about the use of financial data sharing by Canadians with screen scraping. At the time of the report, over 4 million Canadians were using screen scraping to share their financial data with financial management tools.

The final report also stated a commitment to create an Open Banking system that took into consideration the needs of financially marginalised citizens or those who work outside normal employment settings, such as gig workers, and to reach those who might be marginalised by lack of broadband access. The Canadian Government plans to monitor the impact of Open Banking on geographically remote residents, as well as vulnerable and financially marginalised Canadians. The design of the Open Banking system is intended to be complemented by financial education policies, programs, and resources.

The Bank of Canada has, with New Zealand and Australian partners, formed a voluntary network along with indigenous partners to raise awareness of indigenous economic and financial issues. Included in this network is a hope that an understanding will be fostered surrounding the respectful use of Indigenous data and support for financial and economic education for and about Indigenous Peoples. 

Canada ranked 23rd out of 134 countries in Wiley’s Digital Skills Global Index 2021