Image credit: Getty Images
Canadian regulatory authorities have a habit of taking it slow and easy when it comes to implementing new financial services such as open banking.
Although it is currently already available in a host of countries including the U.S., Australia, the U.K. and Brazil, it appears that Canadians’ understanding might be quite low, according to results of a study conducted by the Financial Consumer Agency of Canada (FCAC) and released in June.
The FCAC, which defines open banking as a “framework where consumers and businesses can authorize third party financial service providers to access their financial transaction data, using secure online channels,” embarked on the study to determine just how savvy Canadians are about it
Findings by the federal government agency, which is responsible for protecting the rights and interests of consumers of financial products and services, revealed that “most Canadians are not aware of open banking, and those that have heard of it do not understand it fully or hold misconceptions. However, Canadians expect that they will be protected when something goes wrong and often assume that protections are consistent across providers of financial services.
“This study’s findings indicate that the consumer protections embedded in an eventual open banking framework have the potential to influence Canadians’ willingness to participate in open banking, and therefore the success of an open banking framework itself.”
In what was defined as an “interpretation of the results,” business law firm McMillan LLP stated in a financial service bulletin released in late June that, in terms of the results, “it is important to keep in mind that the survey data was collected over a year ago. Given recent media coverage, consumers are likely much more aware of open banking than they were just last year.
“Furthermore, consumers do not necessarily need to have a definition of open banking in mind or understand the intricacies of how open banking will work in order to benefit from it.
“The research indicates that the success of open banking may be influenced by the availability of consumer protections embedded in an open banking framework.”
It was the delay of the FCAC in delivering the framework that dominated discussion earlier this year at the Open Banking Expo Canada conference in Toronto, for, without a framework, there is no open banking.
Among the speakers was Anmol Grover, practice head for open banking at technology services and consulting company Wipro, who is responsible for the delivery of open banking compliance and monetization programs to the firm’s clients.
Canada, he said, can learn a great deal from other markets such as the U.K. and Australia. In a keynote presentation, his advice to those in attendance was this: Speak with your counterparts in those countries and others to understand what they achieved and how they went about it.
In the U.K., for example, the open banking journey began in 2017, when the Competition and Markets Authority (CMA), which regulates competition throughout Great Britain, directed nine of the country’s largest financial institutions to deliver open banking services.
What followed was the launch of the Open Banking Implementation Entity (OBIE), a private body funded by the banks and overseen by the CMA, which created a roadmap that each of the banks must follow. In January of this year, a U.K. government press release stated that the “six largest banking providers have implemented fully the standards required by the CMA to deliver open banking, helping to provide innovative services to millions of account holders, securely.”
As for the three remaining providers – Allied Irish Bank, Bank of Ireland and Danske Bank – the CMA said it expects them to do the same as soon as possible, adding that it will take “enforcement action to ensure this happens in a timely way.”
The approach taken in the U.K., said Grover, is one that could take place here.
Many organizations involved in open banking in Canada, he said, “are losing their patience a bit and they want some accelerated outcomes. Accelerating and fast-tracking (the framework) I sense should happen in the near future.”
“The reason for open banking, he said, “is to give consumers more choices and to make their lives easier.”
In a blog released in March, Grover wrote that “open banking is a landscape in which banks give third-party providers access to customers via APIs (with customer consent.) The exact drivers of this transformation differ across geographies.
“In the U.K., for example, the transformation began with a top-down effort by policymakers to increase competition in a highly concentrated banking market. In the U.S., by contrast, the transformation has been organic and market-driven, as fintech startups and brands work independently and with partner/sponsor banks to break down and re-assemble the banking landscape.
“Open banking is continuing to gain traction around the world, and Canada will be one of the next countries to adopt open banking regulation, after its regulator and industry working group converges on the exact open banking standards.”
The post The long and winding road … to open banking in Canada first appeared on IT World Canada.
This section is powered by IT World Canada. ITWC covers the enterprise IT spectrum, providing news and information for IT professionals aiming to succeed in the Canadian market.