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Christine Day is chief technology and information officer for Questrade, which is a member of the Financial Data and Technology Association (FDATA) North America. Steve Boms is FDATA North America’s executive director.

Canada is considering a move toward open banking, a formalized system in which consumers are empowered to share their bank-held data with third-party providers (TPPs) to encourage competition and innovation. If the experience in Britain is a guide, this advance will transform the country’s economy and improve outcomes for consumers, businesses and financial institutions (FIs).

The Financial Data and Technology Association was created to help drive this initiative forward in Britain and now globally. Collaboration was the key to Britain’s open banking regime going live in January, 2018. Even though full implementation will not be complete until this September, several benefits already are evident.

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From an environment where fintech apps, including budget and savings apps, were not regulated, now at least 200 TPP firms already are on regulatory supervision under the U.K. open banking system and another 130 are going through the process. Several banks also have created their own TPPs to deliver technology-based financial services. Consumer excitement is building, too. More than 7,500 new customers each day are sharing their data via the open banking system by aggregating their accounts.

The knowledge that a bank or credit card provider can no longer block aggregation or force contracts for access also has led to a massive inflow of new capital into the economy. Even in the midst of Brexit, the U.K. attracted US$3.3-billion in fintech venture capital investment in 2018. Only the United States and China attracted more.

While initially skeptical, FIs have embraced open banking. According to a Forrester study, 99 per cent of FIs view open banking as beneficial to financial services.

Consumer experiences and opportunities are improving. For example, by customers sharing income and expenditure data with CreditLadder and Nationwide, the two companies will be able to identify tenants who have excellent records of payment and help them buy homes.

Collaboration like this is, unfortunately, more difficult in Canada, where, unlike in most Western countries, no consumer financial data right currently exists. While 60 per cent of Canadian FIs are currently partnering with fintech companies, more than three-fifths of fintech founders have said they have experienced significant challenges pursuing partnerships, including navigating lengthy procurement processes.

Given the enormous consumer benefits of open banking, and the move toward this framework globally, Canadian lawmakers must work quickly. Thoughtful, yet swift implementation of open banking will put Canada in a position to compete with services customized to individual customer needs and will yield greater economic opportunity for consumers along the income spectrum.

With so many Canadians already having adopted fintech tools – FDATA North America’s members today provide approximately 3.5 million Canadians with aggregation-powered, fintech tools – a thoughtful approach that further encourages the use of these tools and balances legal requirements with the ability of the market to innovate over time also will provide for more widespread consumer benefit. Canada’s financial sector is important to its economy so continuing to drive innovation and improve efficiency is critical not just to the future of the industry and the country, but also to individual Canadians.

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Britain’s experience demonstrates the need for open banking in Canada, but it also presents an opportunity for improvement. Britain’s open banking system has wrestled with complexity, expansion to additional account types, and nearly all stakeholders agree that communication and messaging – both to end users of the system and to the TPPs required to submit to regulatory oversight – should have been more of a focus.

For example, the word “open” led some consumers to believe that their data might be shared without their permission. This myth was promoted by some actors in the system even though it is patently false. A better name for the system may be “consumer-directed banking” because, in a well-framed open banking system, the end user has full control and utility over their financial data. Third-party providers need permission to access specific data, and consumers can revoke this permission at any time.

This message must be at the heart of all deliberations. If policy-makers choose to move forward with open banking, they also must better communicate the process for becoming certified. Lack of clarity surrounding onboarding made the process in Britain more time-consuming.

As FDATA North America argued recently before the Senate’s standing committee on banking, trade and commerce, while Canadian officials should review the lessons learned from Britain’s open banking deployment, one thing is clear: Any challenges are far outweighed by the benefits. If we really want to help Canadians make more informed decisions about their financial matters and keep our financial-services sector vibrant, we must welcome the many benefits that open banking can bring to consumers, businesses and the industry.

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