OBIC, a non-proﬁt organization aimed at promoting and driving the development of open banking in Canada, sent a letter to Canada’s Finance Minister requesting the Open Banking Recommendations Report be released by the end of June. The letter was written collectively by the the Open Banking Initiative of Canada (OBIC) Board of Directors.
Below is a copy of the letter:
Since the conclusion of the Department of Finance’s consultation on the proposed Open Banking framework released in December 2020, there has been a delay in the release of the recommendations report outlining the path forward for implementation. In order for meaningful and positive change to take place for Canadian consumers and small businesses, we ask for the support of the Department of Finance Canada and that the second report from the Advisory Committee on Opening Banking be publicly released by the end of the summer of 2021.
We write this letter to you as concerned ecosystem stakeholders and on behalf of our members as well as Canadian consumers and small businesses owners, who would significantly benefit from increased competition, opportunities for growth, and the ability to recover from the COVID-19 pandemic with the implementation of an Open Banking framework in Canada.
Canada has fallen quickly behind other countries in their development of an Open Banking standard, with nations such as the United Kingdom, Singapore, Australia and Brazil far ahead in regard to the evolution of their regulatory environment and adoption. The release of the recommendations report will be a critical next step in helping the Canadian financial services industry and its stakeholders have a clear view and understanding of the Government’s recommendation and support for an Open Banking framework in Canada. There is currently a wide spectrum of possibilities for what an Open Banking framework could look like within the Canadian context, including our current light industry-led approach, to a comprehensive government mandated framework and accreditation process.
As stakeholders with a unique position in the Canadian market, we can attest to the speed of innovation and change currently taking place. Industry players such as traditional financial institutions and FinTechs are currently negotiating data agreements, bilateral agreements, and leveraging screen scraping without the use of guardrails to dictate how best to protect consumer data or provide recourse for the worst-case scenarios. In a recent CBC investigation, it was found that banks were increasing bank fees during the pandemic despite profits; Open Banking creates fee transparency, discouraging such behaviours. Open Banking will also help to create a more even playing field for other ecosystem stakeholders as well as provide Canadians with more choices when it comes to their financial products and services.
With the release of the Federal Budget on April 19th, 2021, we were hoping to see Open Banking included in the 2021 Federal Budget, as it is a critical aspect of the future of financial services in Canada. We are deeply concerned with the lack of an established Open Banking framework in Canada and the seemingly unprioritized value of Open Banking by the Department of Finance Canada, especially after a round of industry consultations and promising signals from the Canadian Government.
Given the slowdown in policy work during the summer and the prospect of a fall election, Canada runs the risk of another year without federal guidance on Open Banking. This prolongs the risk of Canadians sharing their financial data insecurely and increases the risk of negative regulatory arbitrage. We see incredible potential in a post-pandemic digital economy for Canadian consumers and small businesses through the secure financial data sharing enabled by Open Banking regulation. Canada is running out of time to develop globally competitive financial services innovation without federal guidance. The time is now to prioritize policy work on an Open Banking Framework.
Two years ago, a report deposited in the Senate of Canada stated:
“Canadian consumers need open banking regulations as soon as possible for three main reasons: to keep their personal financial information safe; to be provided more choice and improved financial products and services; and to help keep the Canadian financial sector strong and internationally competitive…we also recommend that the Government announce a bold, clear and concrete timeline for delivering consumer-directed finance. As a form of guidance, the Committee notes examples of other jurisdictions suggesting that a time frame of one to two years is reasonable.”
These comments were shared in the report “Open Banking: What it Means for You” from June 2019 by the Standing Senate Committee on Banking, Trade and Commerce Senate of Canada. By your own assessments, 1-2 years was an appropriate timeline. Without immediate action, starting with the release of the recommendations report, this target will be missed and the patience of an already frustrated financial sector will continue to wane.
In closing, the OBIC Board of Directors and the Department of Finance share a common goal in wanting to create sustainable economic and security policies and programs for all Canadians. We are confident that by partnering together we can find a mutually beneficial path forward for all stakeholders and are here to support in any way we can. As subject matter experts, we are at your disposal to discuss any of the topics brought forth in this letter and we look forward to the opportunity to do so.