The Department of Finance Canada has launched a public consultation on the merits of open banking. The launch, which also features a consultation paper, follows the appointment of the Advisory Committee on Open Banking in September 2018.
Open banking has become a popular topic of conversation in financial services circles over the last year. The general premise revolves around FinTech developers leveraging open APIs to create better financial transparency for customers. Finance Canada’s definition of open banking for the purpose of the consultation follows below:
“Open banking is a framework where consumers and businesses can authorize third party financial service providers to access their financial transaction data, using secure online channels. The benefit to consumers and businesses is that it allows them to access new products and services that enable them to better manage their financial affairs. In jurisdictions that have adopted open banking systems, participating service providers must meet standards with respect to privacy, security and operational stability. Additionally, consumers and small business can opt-in and opt out at any time and a clear system exists to manage inquiries and address complaints. In many respects, a benefit of an open banking framework is its potential to increase individual control over personal financial information.
“Open banking holds the potential to reduce costs, improve Canadians’ ability to manage financial services, and gain access to the wider range of services that the digital economy has to offer. In order to deliver on these potential benefits, any system must have appropriate consumer protection, while also supporting the continued resilience and stability of the financial sector.”
According to the consultation paper, the Advisory Committee’s mandate will be executed in two phases: assessing the merits of open banking, and assessing open banking implementation considerations.
The consultation also lists questions the government is hoping to gather answers from the Canadian public. Some examples:
- Would open banking provide meaningful benefits to and improve outcomes for Canadians? In what ways?
- In order for Canadians to feel confident in an open banking system, how should risks related to consumer protection, privacy, cybersecurity, and financial stability be managed?
- If you are of the view that Canada should move forward with implementing an open banking system, what role and steps are appropriate for the federal government to take in the implementation of open banking?
The Committee is expected to deliver a report to the Minister of Finance with a focus on protecting consumer privacy, transaction security, and the stability of the financial sector. The Committee will consider implementation opportunities and challenges later in the year.
The deadline to deliver feedback to the Advisory Committee is February 11.
