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Business Commentary Canadian consumers need control of their information to level out the data playing field

Adam Felesky is chief executive officer of Portag3 Ventures, a Toronto-based early-stage investor dedicated to backing the next generation of global financial services companies.

“Data is the new gold” is a popular phrase among the players working to build Canada’s emerging digital economy. But unlike the storming of the Klondike, this elusive modern treasure is held and controlled by too few players – and too often for their benefit alone. Canadians must have access to and control of their own data to restore a sense of trust that their privacy is being protected and that they can be the beneficiary when their data are used.

A study by the Office of the Privacy Commissioner of Canada in 2016 found the vast majority of Canadians are worried that they are losing control of their personal information with 92 per cent expressing concern, including 57 per cent being very concerned, about a loss of privacy. It’s fair to say that the regular data breaches we see reported in the news and the Cambridge Analytica-Facebook scandal have done nothing to assuage these concerns.

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This sentiment should alarm decision-makers: If public trust is lost, the benefits of Canada being a leader in the digital economy could quickly fade away. Canada’s enviable leading position (and billions of dollars invested) in artificial intelligence, as an example, could be all for naught.

If we don’t proactively address these sentiments and concerns, we also risk regulatory overreach and draconian policies focused solely on safety and protection, to the exclusion of fostering competition and innovation for the benefit of the consumer.

The federal government’s recently announced Digital Charter, championed by Navdeep Bains, Minister of Innovation, Science and Economic Development, is a positive first step. While various provincial and federal ministries and regulators are working to address the public’s concerns around data, the Digital Charter provides a principles-based framework that will lead, one hopes, to a more cohesive and coordinated regulatory response across the country.

The discussions occurring around the concept of open banking, under review by the Department of Finance and currently being repositioned as “consumer-directed banking,” is a telling example of why the Digital Charter matters.

It is estimated that 3.5 million Canadians are currently hacking their way to gather their own financial data through a practice called “screen scraping” via third-party service providers. Consumers engage with these services so they can get a holistic view of their personal finances across the multiple institutions they deal with. This helps consumers better understand opportunities for saving and budgeting, and get transparency around fees and products that can help them to do both better.

While almost all are in agreement that the practice of screen scraping needs to be replaced with safer and more secure means of data sharing, how this comes to be is the critical question.

When consumers and businesses can obtain real and immediate value from the data they generate and access new products and services that will emerge as a result, it will take control out of the hands of the large data holders – which in Canada are the banks. Canada must move to a place where consumers, leveraging their own data, are ultimately in control.

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Most incumbents argue for a marketplace solution with little regulatory oversight. We believe leaving that in the hands of those who have the most to lose from open banking will lead to a poor outcome for both innovative entrepreneurs and Canadian consumers. The delay in the implementation of payment system modernization is an example of the risk of a marketplace solution.

Striking the right balance between consumer protection and supporting innovation and competition is critical. It speaks of levelling the playing field and of transparency, portability and interoperability – essential principles to ensuring that innovative companies can create new products and services without having to overcome what is today an insurmountable data advantage of the incumbents.

The Digital Charter is an important starting point for all levels of government, regulators and industry to create a cohesive and sensible regime that ensures we preserve the trust of Canadians and earn the licence to create new products and services that allow them to leverage their own personal data for their own benefit.

The “new gold” of data has the ability to lead to incredible innovation, competition and empowerment. But if our data are only held and accessible by a few ever-growing data monopolies for solely their benefit, we will continue on a path leading to further public outrage, a risk of regulatory overreach and incumbents falling further behind as they are not forced to compete on a level playing field. Worse still, as Canadians we will fail to fully participate in the fruits of the exciting and growing global digital economy.

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