The federal government should be taking action to enable open banking in Canada, argue the leaders of the Standing Senate Committee on Banking Trade and Commerce, who delivered a report on the subject earlier this year.
In an opinion piece posted on the Senate Banking Committee’s website, Douglas Black, who chairs the committee, and deputy chair Carolyn Stewart Olsen argue that it’s time to give Canadians greater control over their financial information, while also enabling fintechs to compete with incumbent banks.
“An open banking framework would not only enable choice for Canadian banking customers — it would also spur the development of home-grown financial technology companies,” they said.
But they also acknowledged that the effort faces challenges, particularly when it comes to security and protecting customers’ privacy.
“While recognizing that trust can only be built over time, the evidence we heard suggests the government should create a registry of accredited third-party providers and establish an ‘innovation sandbox’ so fintechs can safely test and develop new open banking technology,” they said.
The senators also recommended that privacy legislation be modernized and that the Office of the Privacy Commissioner be given “teeth so that it can make orders and impose fines on organization that fail to live up their privacy obligations.”
Additionally, they argued that the government should be financing consumer protection groups to help educate consumers on the benefits and risks of open banking. They also said the government should designate the Financial Consumer Agency of Canada (FCAC) to ensure compliance with federal consumer protection requirements.
“Open banking is here to stay. Consumers are demanding it. Fintechs are lining up to provide it,” they say. “It’s time for the federal government to act.”