Open Banking in Canada: Consumer Awareness Must be at the Forefront

Posted on February 8, 2022

The Canadian government finally carved out a path ahead last year. In 2023 we will usher in the start of an Open Banking environment. And while many in the finance industry have had the benefits of Open Banking swirling in their minds for quite some time, compared to the rest of the world, the concept is new for North Americans. And that is why in 2022, education needs to be at the core of the discussion. Our role must be to help consumers and businesses navigate this new world. Canadians need to understand the concepts and the benefits. And only then will we ensure the success of this new financial ecosystem.

These last two years of the pandemic have launched us straight into a digital transformation stratosphere. We saw changes in consumer and business behaviours that would have taken months, if not years, to happen overnight. The abrupt and immediate need for contactless transactions set the stage for a payment revolution in Canada. With Open Banking at the helm, it is up to us in the industry to lead the charge. Executed successfully, Open Banking brings equality to the industry. We can expect to see a realignment of the financial landscape and improvement in the lives of Canadians. Micro, small, and medium-sized businesses can expect to reap the most benefits.

Global Open Banking Survey

What to watch for in 2022 

January 2023 will see Canada operationalize the Open Banking system. The lead-up should be where the most significant strides happen, where a foundation is set. Until now, Canada and the US have been slow on the uptake of Open Finance.

"Canada has sat on the bench and watched as many of the world’s largest economies raced toward implementing a well-regulated, modern Open Finance regime."

Steve Boms Executive Director, FData

Now it is Canada's turn. Armed with an ability to learn from those that have come before, we have the opportunity to shift our thinking. In 2022, banks, fintechs, government, and industry players can set the path; together with consumer education, we can be a pivotal force. Additionally, we need to provide the tools to consumers to become financially savvy. Basing Open Banking on the customer journey puts Canadians in the driver's seat regarding their money and data. 

The innovations we see in the payments industry put the customer first. Plaid's Albert Malikov says, 'Open Banking payments revolution is beginning, expect adoption to grow and penetrate new segments.

Canada’s Open Banking Vision 

Open Banking done right will improve the economic outcomes across the country. Consumers will access financial services in a secure, efficient, and consumer-centric fashion for the first time.

When Canadian consumers gain more control of their data, innovation will flourish across industries, and financial inclusion will become a reality. An estimated 10% to 20% of Canadians are either unbanked or underbanked. We improve upon what already exists with the ability to offer new and tailored services. We expand the potential to serve those our current system fails.

The key consumer outcomes place Canada on the right track.

  • Data must be protected.
  • Consumers hold the control when it comes to their data.
  • They have the ability and can rely on access to a range of valuable and consumer-friendly financial services.
  • If issues arise they have the ability for recourse.
  • They will benefit from consistent consumer protection and market conduct standard.

Open Banking Benefits All

We are simply at the precipice. In fact, more than four million Canadians are already accessing Open Banking-style services. The myriad of Open Banking benefits run wide, and the potential is unlimited. 

Running a business is about to become less complicated. Improved platform applications will streamline accounting processes. From onboarding to reconciliation, companies will save on time and money. Expect significant transformation in the lending industry. Across the board, faster decisions on loans, auto financing and mortgages will get money into the hands of those that need it when they need it. This, in turn, can deliver a continuous boost to keeping the Canadian economy moving. 

Open Banking Benefits

Recognized worldwide for its ability to uphold financial safety and stability, Canada has an excellent opportunity to ensure a system that delivers ultimate value to customers. By incorporating the objectives of Open Banking into the financial services landscape alongside government and industry collaboration, Canada can achieve the desired balance of innovation and competition while preserving the system's resilience. 

Open Banking in Canada: Consumer Awareness Must be at the Forefront article was originally published on The Paypers Voice of the Industry on January 27, 2022.

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