Rizwan Khalfan is Chief Digital and Payments Officer for TD Bank Group
Digital innovation is changing every industry, including financial services, and the main beneficiaries are Canadians: faster transactions, on-the-go access, more tailored products and a host of new capabilities are delivering a new level of convenience and choice unparalleled in history.
As a country, and as an industry, we must address these changes and continue to respond to our customers’ desire for more capability. However, as we strive to meet the increasing demands of Canadians, we must do so without introducing new risks – from cybersecurity to privacy – that could undermine their trust in the system.
As we explore a Canadian approach to open banking – the sharing of personal financial transaction data between organizations – we must move with both purpose and care. Canada is consistently seen as a global leader in financial services, most prominently during the financial crisis of 2008, when Canadian banks were a positive outlier. Leadership from the industry and a principles-based regulatory system shielded Canada and Canadians.
Now, as we look to forge a responsible path toward open banking, we don’t need to look beyond our own border to learn how to build, adopt and safely maintain innovative technologies.
To inform our thinking, we have the benefit of observing other jurisdictions’ open banking implementations and learning from their successes and challenges. There is a lot to learn – from government-led initiatives in the EU to market-led efforts in the United States.
In recent weeks, some have pointed to Britain as a model for Canada to follow. However, a reliance on the British experiment overlooks fundamental differences in our banking systems and regulatory regimes, which make a British-style approach both impractical and fraught with unnecessary complexity. In fact, authorities and industry players there are already looking at ways to reshape and redirect their approach to deliver better outcomes.
For example, while enormous investments of time and energy have been made over the past year, a recent report from Splendid Unlimited, a company that helps retailers and banks design and build digital platforms, suggests that only 22 per cent of people in Britain have even heard of open banking, significantly curtailing adoption and the realization of its promised benefits. We have an opportunity to do better.
We believe Canada would be best served by an industry-led approach, one that will deliver faster results and best fit the country’s regulatory framework and its unique financial-industry structure.
To build a new future that continues to benefit consumers, and in which Canada maintains the global competitive advantage of our financial system, broad collaboration is critical. Players from the public and private sectors, technology experts who can innovate at scale and financial institutions that understand the complexity of our industry must work together to build a made-in-Canada solution.
Consumer confidence in our financial-services system must be at the centre of our strategy, data privacy a hallmark of what we build, with advanced cybersecurity practices embedded in every step we take.
For example, a Canadian approach must empower customers to grant and, just as importantly, to revoke access to third-party providers in a transparent, safe and secure manner. To achieve this, the industry must adopt common technical and security standards and agree on common practices that explicitly protect customer data and how it is used.
Financial institutions and third-party providers participating in the ecosystem must commit to protecting customer privacy by adopting security and transparency in transmitting and managing data. Canadians must be informed of what financial transaction data is being shared, with whom and for what purpose.
Finally, public education and clear and transparent communication will be critical to truly empower consumers to make informed choices and that is a collective responsibility across the industry. Engaging the public on open banking and educating people on security will be key to maintaining consumer trust.
As we strive to capture the next big opportunities of the digital era, we need to push for progress and accelerate innovation while maintaining the trust in, and stability of, our system. We need broad collaboration across the industry. And we must ensure an informed public is armed to make the right decisions. Canadians deserve nothing less.