The Financial Data Exchange (FDX), an organization that aims to bring the financial industry under a common standard for financial data access, has claimed Canada and the United States are “global leaders” in open banking adoption.
FDX, which only operates in the United States and Canada, recently reported 16 million consumers in Canada and the United States are using its FDX API for open banking and open finance data sharing.
“The common narrative that the US and Canada are somehow behind on open banking is just wrong.”
– Don Cardinal
Headquartered in Reston, Virginia, FDX aims to bring together financial institutions, FinTech firms, and other stakeholders around a common standard for data sharing across the entire financial industry. FDX says its open banking standard is built on principles such as control, access, transparency, traceability, and security. The organization offers membership to financial industry organizations looking to adopt the FDX API.
Since expanding to Canada last year, its members have grown to include notable Canadian banks as well as FinTech companies such as Koho, Flinks, and EQ Bank.
FDX noted the Open Banking Implementation Entity (OBIE) in the United Kingdom recently reported that over 3 million consumers are using OBIE’s open banking API. FDX also noted other regions globally are in various stages of developing and implementing regulations and standards on open banking and open finance.
FDX’s claims about open banking adoption in Canada and the US follow years of reports that Canada has lagged behind in this area. An EY analysis from 2019 found the country trails peers specifically in terms of regulatory environment and adoption potential. One of the most widely-cited reasons for Canada’s lagging global position in open banking is regulation, or a lack thereof.
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CEOs in Canada’s innovation ecosystem have also expressed the need for a more competitive environment in Canada for FinTech startups. In 2019, Koho CEO Daniel Eberhard told BetaKit the regulatory environment in Canada has made it much more difficult to succeed as a challenger bank, as regulators have prioritized managing risk over fostering competition.
In light of the new demands for better regulation, Canada’s Department of Finance launched open banking consultations, which are part of a broader government review on open banking. These talks were postponed in early 2020 due to restrictions on public gatherings put in place to curb the spread of COVID-19. The federal government reopened the open banking consultations in the fall. While the Canadian government is working on its open banking regulations, FDX serves as a nonprofit industry consortium already working to create a common standard for data sharing.
FDX’s adoption claims indicate that open banking adoption in Canada, or at least in North America, is more advanced than previously thought. “The common narrative that the US and Canada are somehow behind on open banking is just wrong,” said FDX managing director Don Cardinal. “Not only are FDX technical standards paving the way forward for rapid API adoption in North America that is outpacing the rest of the world, but FDX is evolving the notion of open banking.”
Image source Unsplash. Photo by naipo.de.