Canada’s Department of Finance has delayed its consultation on open banking until the “Fall at the earliest,” BetaKit has learned. The consultation was expected to be held this Spring.
“This [delay] is just going to put us farther behind.”
In an email sent to stakeholders and obtained by BetaKit, the government’s Advisory Committee on Open Banking said the decision was made due to restrictions on public gatherings put in place to curb the spread of COVID-19.
The government’s open banking review, which was first introduced in Budget 2018, assesses whether open banking would deliver positive results for Canadians. The review entered its second phase at the end of January. This phase is focused on determining how regulators and the financial sector can mitigate data security and privacy risks associated with open banking.
The second phase consultations are expected to be conducted with industry stakeholders to address potential solutions and standards to enhance data protection in the financial sector, by reviewing issues like governance, consumer control of personal data, privacy, and security.
“During the intervening period, our committee will continue the work to develop materials for stakeholder consultation,” Kïrsten Fraser, senior analyst at the Financial Sector Policy Branch, said in the email to stakeholders. “We… look forward to a dynamic and fruitful consultation process in the not too distant future.”
The general premise behind open banking revolves around FinTech developers leveraging open APIs to create better financial transparency for customers. The broader objective of open banking is to promote a more competitive and innovative financial ecosystem, with proponents claiming it allows FinTech companies to augment their offerings and customer engagement, and create new channels for digital revenue.
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Andrew Graham, founder and CEO of Toronto-based FinTech Borrowell, who has been involved in conversations with the Department of Finance about open banking in addition to other FinTech startups, major banks, and credit unions, expressed his disappointment regarding the delay.
“Canada is already pretty far behind other countries when it comes to open banking,” Graham told BetaKit. “This [delay] is just going to put us farther behind.”
Worrying: Canada's open banking consultations delayed until "the fall at the earliest." @FinanceCanada and @Bill_Morneau pls revisit this. Consultations can happen virtually. Canadians are relying more than ever on digital services and we are behind the rest of world. pic.twitter.com/mDjC0TXn0A
— Andrew Graham (@andrewtgraham) April 30, 2020
The department’s advisory committee released a report in January summarizing its findings from the review’s first phase, which was based on consultations with the public that were launched in January 2019.
That report was framed around whether open banking provides meaningful benefits for Canadians, what the government’s role should be, and how risks could be mitigated. One of the report’s key findings was that consumers showed a real demand for data-driven financial services.
RELATED: Lagging regulation, consumer trust inhibiting FinTech adoption in Canada
The COVID-19 pandemic has caused massive disruption to Canadian businesses in the last few months. As many many businesses across the country, and around the world, are fighting to stay afloat during the economic downturn, the Canadian government is introducing measures to ensure these businesses have access to capital.
“It’s obviously a very busy time with COVID, but I think what other countries have shown is that having strong FinTech companies can really make the response to crises like COVID better,” Graham said.
Photo by Dennis Jarvis via Flickr.