Industry experts are split on whether Canada should adopt a market-led approach to Open Banking over a government mandated approach.
At the Open Banking Expo Canada quarterly virtual meet-up in June – the first of three in partnership with EY Canada – a panel moderated by Michelle Beyo, founder and CEO of Finavator and board director for Open Banking Initiative Canada discussed what the right approach might be, in light of the fact that Open Banking was missing from the Canadian government’s most recent Budget.
“Many quarters of the industry have been urging the government to press forward with Open Banking, while also criticising we’re at a glacial pace compared with a lot of the globe,” said Beyo.
EY Canada’s Open Banking and blockchain leader Abhishek Sinha said that Bill C11, which was proposed by Senator Bains in November 2020 and has been with the government since, is “a step in the right direction when we think about the transition to consumer-directed finance”.
Ben Harrison, partner, head of partnerships and policy at Portag3 Ventures said there had been “limited to no interest in actively pushing forward”.
“I think the implications of that are industry-led initiatives will continue and it will be harder to pull those back if we ultimately put in place a regulatory framework, and that’s going to create a whole bunch of additional friction that will just take time to work through,” he said, adding that “time is not something I believe we have a great deal of”.
But Hugh McKee, head of BMO Partners at BMO Financial Group, told the panel: “I think we’re sometimes under this false assumption that the regulatory-based approach is going to somehow be faster and better, and I’m not convinced that’s the case.
“I think we can be faster without having to rely on legislation, I think we can be more inclusive. How are we going to include credit unions and other entities if they’re not part of the oversight that the Department of Finance has? We need to address those things.”
McKee concluded that “a market-led approach is probably the fastest way to get from point A to B”.
Derrick Smith, vice president, operations and optimization at credit union UNI Financial Cooperation, agreed, saying: “I think a market-led approach will be faster. If it’s led by the market it will actually get done, it’ll get done quicker.”
He added that there was a need to be prudent though, on the basis that “our consumers have high trust in our financial institutions in Canada and it’s important to keep that trust going forward”.
Also on the panel was Hanna Zaidi, director of Wealthsimple, who said: “We’ve already seen what a market-led approach looks like – we’re in it right now in the absence of anything government mandated.
“And I think the one piece, at least from the fintech perspective, I’ve seen that it fails to do is add that level playing field that allows meaningful competition, spurred from other players in the market other than the incumbents.”
Sinha, of EY Canada, added: “We don’t believe that Open Banking is something that you have or don’t have – it’s not that black and white.
“It’s about consumers trusting businesses… as well as changing their behaviour to take advantage of new offerings. We think Open Banking has less to do with one segment prevailing over the other segment, [and] rather more to do with competition in the market.”
To watch the panel debate in full and on demand, click here.