Final report on Open Banking in Canada sets 2023 deadline

The final report from the Government of Canada’s Advisory Committee on Open Banking has recommended that the initial Open Banking system should be operational by January 2023 and that it should adopt a “hybrid, made-in-Canada” approach to implementation.

The report proposes that the initial phase of Open Banking should be implemented quickly, becoming operational by January 2023, in order to help eliminate screen scraping, which it identifies as posing “real security and liability risks” to Canadians.

It also sets out that the initial scope of Open Banking must include the reciprocal sharing of data and driven by “express consumer consent”, meaning that a consumer could request the transfer of their data between banks, from their bank to a third-party service provider, from a third-party service provider to a bank, or a two-way flow between two participants.

In terms of the implementation of Open Banking, the panel recommended that it be neither “exclusively” government-led nor industry-led, but that Canada should pursue a “hybrid, made-in-Canada approach” that relies on collaboration between government and the industry.

The advisory panel also recommends as an immediate first step the appointment of an Open Banking lead who will be accountable to the deputy minister at Finance Canada, to convene industry to advance what the report described as three “core foundational elements”. These are common rules for Open Banking participants, an accreditation framework and technical specifications.

A purpose-built governance entity will manage the ongoing administration of the system, taking over as the mandate of the Open Banking lead concludes.

Canada’s deputy prime minister and finance minister Chrystia Freeland said: “Consumer-driven finance, or Open Banking, is already part of Canadians’ lives. Many use digital services everyday to manage their money, to budget for expenses, and to make investments.

“Working towards a regulated, made-in-Canada system will make sure that we continue to enjoy a strong, stable, and innovative financial sector that is globally competitive, promotes consumer choice, prioritizes data privacy, and contributes to economic growth. I want to thank the committee for their work and look forward to reviewing their recommendations as we develop next steps.”

Among the panel’s recommendations, it suggests that federally regulated banks should participate in the initial scope of the Open Banking system and that provincially regulated financial institutions, such as credit unions, should have the opportunity to join voluntarily.

Michelle Beyo, CEO and founder of Finavator, said: “The release of the Open Banking recommendations report by the Government of Canada’s Expert Advisory Panel on consumer directed finance is a very important first step towards an Open Banking framework that will allow Canadian consumers and SMEs to control their data and access competitive financial services.”

She added: “The time is now for Canada to push forward to drive innovation and financial inclusion.”

The minister of finance announced a review into the merits of Open Banking in 2018, and tasked an Advisory Committee on Open Banking with leading the review.

The report was submitted to the government in April this year and was released yesterday (4 August).

Hear what Michelle Beyo had to say when she joined Open Banking Expo’s Ellie Duncan as a guest on the Unplugged podcast.