Open Banking, known as consumer-driven banking in Ottawa, aims to enable individuals and businesses to securely share their financial data with third-party service providers outside traditional banks. This framework could help users consolidate information from various institutions into one interface and assist renters in establishing credit histories based on rent payments.

Initial Legislative Steps

A preliminary legislative move was initiated about a year ago as part of the 2024 federal budget. This step assigned the Financial Consumer Agency of Canada (FCAC) with the responsibilities of developing and overseeing the Open Banking framework. However, further legislation is necessary to outline accreditation procedures for fintechs and establish uniform standards for financial institutions.

Implementation Progress Concerns

In spite of initial momentum, progress has slowed down recently. The absence of a spring budget and Canada’s recent federal election have left observers uncertain about the government’s priorities in this area. Although the ruling party remained in power after the election, its platform did not include specific mentions of consumer-driven banking.

According to officials from the National Bank of Canada, progress has stalled due to delays related to the election process, and there is a lack of clarity on how the framework will be developed. The bank has taken steps to establish its own Open Banking solution, enabling fintech firms to access data securely with user consent.

Without a regulated system in place, data sharing between consumers and fintechs continues to depend heavily on ‘screen scraping,’ where users provide login credentials to third parties. Critics argue that this method lacks detailed controls over the data accessed, raising privacy and security concerns. The officials from the National Bank believe that a regulated Open Banking framework would offer more precise control over shared information and clearer guidelines for its use.