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Robert Vokes is senior managing director, financial services, at Accenture in Canada. Andrew McFarlane is global open banking lead at Accenture, based in Toronto. Together with Jonathan Madger, Canadian payments lead, they are co-authors of Accenture’s report Open Banking in Canada: Opportunity Knocks.

Banking services are headed toward a new horizon as emerging technologies and regulations enable better access to data. Broadly, this capability is called “open banking,” a process where bank customers can share access to their financial data with third parties in exchange for the promise of better products and services.

The Senate committee on banking, trade and commerce recently tabled its report on open banking in Canada, which highlighted the need for new regulations to safeguard personal information and provide greater choice, and improved financial products to help keep the Canadian financial sector strong and competitive. The Senate’s report places urgency on establishing momentum especially on the regulatory framework. The committee said if Canada fails to create a regulatory environment conducive to open banking, it may risk becoming “an importer of financial technology rather than an exporter.”

The banking sector has highlighted concerns allowing third parties to access customer data, especially when it comes to privacy, safety and liability. These are indeed serious and compelling points. But everything indicates that open banking is coming to Canada – and, to some extent, it is already here – and banks should ensure they are ready for it.

Canadian banks must make the difficult decision of whether to invest ahead of this change when it is not clear when or how they will be affected. This investment is in addition to the constant technology maintenance, security enhancements and customer service improvements that keep their resources and attention directed on running the bank today.

As banks assess how and where to invest their innovation dollars, they need a clear understanding of what their customers want.

In a recent Accenture survey, we found nearly 60 per cent of Canadian retail banking customers only trust their bank with their financial data. In the same survey, we found three-quarters claim they are not interested in open banking, with 91 per cent citing concerns about the privacy of their financial data as a reason. Nearly half of Canadian respondents said they are willing to share significant personal information with their bank in exchange for better pricing on products and services.

While some banks may interpret this data as a justification to ignore open banking, we believe that would be a mistake.

Consumers want more from their banks than basic services such as chequing accounts and access to credit. They want integrated offers that enhance their life, such as cash-back rewards from their favourite stores or tips on how to save money on their commute. They are interested in perks based on where they shop most often and priority services such as fast-track insurance-claims settlement. We’ve found that in addition to retail customers wanting more from their banks, commercial customers also seek more innovative processes and better customer experiences with seamless, easy-to-use solutions.

Successful open-banking innovation will require an ecosystem of alliances, vendors and partner organizations – both inside and outside of financial services – each delivering a part of the integrated proposition.

With the strong reputation for financial probity and the trust they hold from consumers, Canadian banks have a golden opportunity to build on their advantages, but they need to seize it.

We see three imperatives for banks to build for the future in this evolving landscape.

Adopt an innovative mindset

Banks need to work collaboratively and openly with regulators to ensure a safe and sound approach to open banking. This means thinking through the sources of value from open banking for their customers and driving the framework.

To thrive in this new environment, banks need to embrace a new, innovative mindset and consider working with a wider network of partners to bring new offerings to market, for example, by collaborating with financial-technology (fintech) firms and other startups to augment their offerings.

If banks don’t accept new operating models, others will – and banks will run the risk of losing that critical customer stickiness and loyalty.

Act now

Across the board, Big Tech and fintech growth are pushing the industry to foster innovation much faster than in the past. Banks need to shake themselves out of institutional complacency and recognize that new competitors are rewriting the customer-value proposition.

Banks that blaze a new trail will help protect the bedrock of their business and create new growth. Scale and brand are strong advantages in the banking system if they can be channelled to bring new, innovative services.

Accept liability, protect data

Banks must recognize that open banking is here; for example, personal financial-aggregation services are offered by many companies that pull bank data on behalf of their customers. Even though consumers are willing to share data with third parties, they still expect banks to protect that data.

By using application programming interfaces, also known as APIs, to connect with registered third-party payment providers, banks may open a greater attack surface to potential cyberadversaries. If a customer’s account is compromised, in their eyes the liability and responsibility for restitution remain with their bank.

In an ecosystem-driven environment, it is essential privacy and protection are embedded into platforms with improved cyber-resilience to defend everyone.

Ignoring the pending arrival of open banking is not a solution, and neither is viewing it solely as a threat. Our Canadian financial system will benefit as banks reinvent their business models, opening them up to third parties and accepting that the walled garden through which banks enjoyed a privileged position in the economy is a thing of the past.