Open Banking will allow/mandate the financial institutions to share certain data with 3rd parties. It could be an opportunity to grow and develop new business models for existing institutions and fuel creation of new companies in Canada and worldwide.
One of the critical risks for existing institutions is that they may lose existing customers if they don’t innovate fast enough. The most significant risk is that customer data may be compromised and become available to malicious actors.
EU already got started on open banking with the PSD2 directive which is coming to 2018. The Canadian government is reviewing Open Banking strategy in 2018, while Canadian financial institutions are planning significant investments into Open Banking by 2020.
Open Banking is a financial services term as part of financial technology that refers to:
- The use of Open APIs that enable third party developers to build applications and services around the financial institution.
- Greater financial transparency options for account holders ranging from Open Data to private data.The use of open source technology to achieve the above.
Open Banking in EU
Payment Services Directive 2 (PSD2), is a technology driven directive that is to push European financial institutions towards more competition, innovation and transparency. Access to customer accounts via APIs is one of the critical features of the directive, which could create a range of new financial services that would compete with existing institutions. It is coming into effect in 2018.
Open Banking in EU explained by Delloite UK:
Open Banking in Canada
Review of Open Banking is part of the Federal Budget for 2018
…the Government proposes to undertake a review of the merits of open banking in order to assess whether open banking would deliver positive results for Canadians with the highest regard for consumer privacy, data security and financial stability.
There is no clear directive, but it is clear that the Canadian government is taking Open Banking seriously.
Open Banking and Canadian Banks
All but one of 100 payment executives at major banks globally said they were planning major investments in open banking by 2020, according to an online survey by consulting firm Accenture released last month
Canada 2020 Open Banking Policy Lab
On May 7th, 2018, Canada 2020, an independent thinktank, held a policy lab for Open Banking.
Report on Findings and Resolutions can be found here: