As the Canadian Government prepares to enter into an election, Open Banking Expo Magazine caught up with Toronto Finance International on the rise and rise of the Open Banking narrative in Canada.
The dialogue on Open Banking in Canada has shifted considerably over the last couple of years. No longer is it a question of ‘should’ or ‘if’: the narrative today undoubtedly focuses on ‘when’ and ‘how’.
The rise of Open Banking is increasingly viewed as an inevitable evolution in the Canadian financial ecosystem. Toronto Finance International, in its role as a convenor of government and the financial sector around issues that impact the growth and competitiveness of the industry, continues to bring our stakeholders together to support the development of the optimal Canadian approach to the implementation of Open Banking in the country.
To inform our thinking, we have the benefit of observing other jurisdictions’ Open Banking implementations, from government-led initiatives in the EU to market-led efforts in the US, and to learn from their successes and challenges.
No doubt, to build a new future that meets the increasing demands of consumers, and in which Canada maintains the global competitive advantage of our financial system, broad collaboration is critical. Players from the public and private sectors, technology experts who can innovate, and financial institutions that understand the complexity of our industry, must work together to build the Canadian solution.
While countries globally are moving at varied paces towards Open Banking, there is broad-based recognition that this evolution can offer significant benefits to consumers, small businesses, financial institutions, and other third-party financial service providers. Innovative applications for consumers which increase financial literacy and better target their financial needs; reduced red tape and faster adjudication for small businesses; and greater financial inclusion for Canada’s diverse population, are all examples of the benefits Open Banking can offer to citizens.
The good news for Canada is that not only do we have one of the fastest growing pools of financial services talent globally (financial services employment growth in Toronto is second only to Shanghai and Beijing over the last five years), we also have the fastest growing technology job market in North America. With broad collaboration between these pools of talent, Canada has the opportunity to capitalise on the opportunity that expanding innovation can bring to the industry and the economy more broadly.
Successfully addressing the challenges of consumer protection, privacy and cyber security risks on a sustainable basis will be critical to reaping the benefits that Open Banking can potentially bring to the financial ecosystem. Devising strict data standards, requiring high security standards, and ensuring clear consumer consent and protection rules will all be key elements to a successful Canadian Open Banking implementation.
Bringing the best minds together to develop these solutions in a collaborative and efficient manner will be a significant contributor to the growth and competitiveness of the Canadian financial sector.
While those of us in the industry may be well immersed in the opportunities and challenges of Open Banking, it must be recognised that for the general public, the issues we are debating are fairly opaque, if not invisible. A well thought out and executed public education strategy with clear and transparent communication will be critical to truly empower consumers to make informed choices and maximize the expanding financial options available to them. Engaging the public on Open Banking and educating people on security will be key to maintaining consumer trust.
Canada is fortunate to have a financial services sector that is a one of our largest contributors to GDP, and a global financial centre which is among the world’s top ten and second largest in North America. Fostering the innovation ecosystem is critical to maintaining the industry’s global competitiveness and Open Banking has the potential to advance both emerging fintechs and established financial institutions. Mobilising the private and public sector to collaborate on the optimal Open Banking strategy for Canada is an important issue for the industry and the country.
Toronto Finance International is a public-private partnership between Canada’s largest financial services institutions and the government.