On April 16, the Canadian government made a long-awaited announcement regarding Canada’s Open Banking implementation.
The budget earmarked $1 million for the Financial Consumer Agency of Canada (FCAC) to support preparation for its new responsibilities and to begin development of a consumer awareness campaign. An additional $4.1 million over three years was also earmarked for the Department of Finance to complete policy work necessary to establish and maintain a consumer-driven banking framework.
In a fast follow, on April 30, the government introduced the Budget Implementation Act, 2024, No. 1, as an initial step toward launching Canada’s consumer-driven banking framework, announcing new draft legislation—the draft Consumer-Driven Banking Act (CDBA)—and draft amendments to the Financial Consumer Agency of Canada Act (FCAC Act).
Fintech.ca sat down with Saba Shariff, Senior Vice President, Chief Strategy, Product and Innovation Officer at Symcor to discuss the current Open Banking landscape in Canada and how fintechs and other industry participants can get started on their Open Banking journey.
Tell us about the current Open Banking landscape in Canada.
SS: Today, in the absence of an Open Banking system, anywhere from six to nine million Canadians typically share their financial data through credential sharing and screen scraping, which is often done through an aggregator as an intermediary. This involves granting a third party, such as a finance or budgeting app, your online banking username and password. This is problematic for many reasons, including the obvious risks of sharing your banking credentials with another third party.
And how is that about to change?
SS: The upcoming Open Banking or Consumer-Driven Banking framework will empower consumers and businesses by allowing them to securely share their financial data with approved service providers through an application programming interface (API). Done right, it will enable Canadians to take advantage of innovative financial services safely and reliably, such as credit scoring and instant loans, loyalty programs, lower fees and more. With ecosystem participants collaborating to enable consumer-driven banking in Canada, it will drive competition for innovative services, ultimately benefiting customers.
What are some of the challenges faced by data recipients such as fintechs, banks and credit unions as they wait for more details on Open Banking?
SS: In the absence of an Open Banking framework in Canada, the current practice of screen scraping presents issues – such as the inability to access reliable data in a standardized format. This makes it challenging to access and integrate data properly, ultimately compromising data quality and downstream customer experiences and services. In addition, data recipients face challenges with future-proofing for an evolving Open Banking landscape while they await further information around matters like standards and guidelines including customer consent requirements.
Hmm… seems like organizations have a lot to navigate and still, many unknowns.
SS: While there are still a few unknowns, the measures announced in the Fall Economic Statement, the Federal Budget and the draft Consumer-Driven Banking Act, have all provided a solid blueprint to get started. With these guidelines in place, intermediaries and data network providers have been working to get things ready. Collaborating with intermediaries for example, will allow organizations to avoid the expense of developing their own Open Banking platforms. Intermediaries can also help manage network standardization, ensuring interoperability across the ecosystem. Lastly, intermediaries can take on day-to-day operational tasks, allowing financial institutions and fintechs to focus on core functions and innovative solutions for their customers.
Anything else they should be doing?
SS: While many discussions so far have focused on policy and technology, it is important to remember that the consumer is at the heart of Open Banking. If they do not understand it, or trust it, they will not adopt it. While the government may have a key role to play in educating consumers about Open Banking, it should be something all ecosystem participants do.
How is Symcor preparing for Consumer-Driven Banking in Canada?
SS: For over 25 years, Symcor has been a trusted technology provider of payment, security and data services. Constantly innovating and supported by the utmost security, Symcor’s suite of digital services support a client’s complete business life cycle. With our COR.CONNECT platform, we are supporting Open Banking readiness through streamlined access to Open Banking capabilities for both data providers and recipients.
How so?
SS: Think of COR.CONNECT as a secure and standardized platform which connects data providers and data recipients, through which consented customer banking information can be securely shared. COR.CONNECT handles compliance intricacies for data providers, ensuring adherence to standards and facilitates all operational requirements for both data providers and data recipients. COR.CONNECT allows data recipients to focus on innovative solutions to enhance their customer experience.
The last word is yours.
SS: Open Banking holds great promise for Canada, and beyond trust-building, it is going to require collaboration between industry participants and the government. By working together to proactively navigate the evolving landscape, we can foster innovation and ultimately empower Canadians to take control of their financial data.
So, if you are a financial institution, fintech or simply want to learn more, connect with Symcor on how to embark on your Open Banking journey.
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