It was with great excitement and enthusiasm that I attended Opening Banking Expo Canada held in Toronto, on June 11, 2024, at the Metro Toronto Convention Centre.
At this year’s Expo, sessions covered topics ranging from the next steps for Canada in Open Banking, generative AI in banking, Open Banking use cases, how real-time payment will interface with Open Banking, and the next steps to Open Data and Open Finance.
Across the one-day conference, speakers discussed the various paths Canada’s consumer-driven finance framework could take. The sessions explored how to align regulatory expectations, meet technology requirements, and enhance customer experience to drive financial empowerment for Canadians.
With significant groundwork and challenges ahead before Open Banking becomes fully operational in Canada, the event offered an ideal platform to strategize, refocus efforts, and share best practices.
The issue of interoperability
Among the informative sessions throughout the day, I’d like to highlight a panel discussion that examined whether Canada needs an interoperable path with the US.
Interoperability refers to the exchange of real-time data between two or more systems that speak directly to one another in the same language, while instantaneously interpreting incoming data, and presenting and preserving its original context. This exchange is facilitated through reliance on APIs and API technology advances that have enabled the adoption of common technology standards.
This issue of a common interoperable path between Canada and the US was examined by a panel at the Expo moderated by, Mauricio Deutsch, senior vice president, banking and capital markets Canada at GFT. He was joined on stage by Eytan Bensoussan, chief executive officer of NorthOne (main image, left), Steve Boms, executive director at FDATA North America (main image, right), Natacha Boudrias, Open Banking lead at National Bank of Canada, Jason Chomik, Canadian director at FDX, and Carrie Forbes, League Data’s chief executive officer.
The panel was largely in consensus that there is a need for Canada to have an interoperable path with the US as it implements its Open Banking strategy. The panel highlighted some of the fundamental issues that would need to be addressed, including customer convenience and protection, market dynamics and competition, technology innovation, and the role of economic integration between both countries.
From a customer convenience and protection perspective, the view was expressed that the ability to share data cross-border between Canada and the US will be beneficial to the customer, but will require a common technology standard. In the absence of the latter, the natural course of events will see the development of two different standards, with limited interoperability between the Canadian and US Open Banking ecosystems.
One of the fears expressed by speakers on the panel was the imbalance, or asymmetry, between the two markets, with the 4,000-plus banks in the US gaining access to a much smaller Canadian banking sector with fewer than 100 banks.
On the issue of technology innovation and adoption, the panel acknowledged that the policy objectives were different for both countries as it relates to Open Banking. Canada, it is believed, would have to work with different jurisdictions or countries, but the US does not necessarily have to follow such a path.
The panel acknowledged that data privacy and data security are very cumbersome and burdensome issues to tackle. Additionally, specific to common technology standards, Canada may have to consider a joint regulatory approach between the Financial Consumer Agency of Canada (FCAC) and the Consumer Financial Protection Bureau (CFPB) in the US.
The panel explored the issue of whether interoperability should extend across both markets in both countries. They felt that a common interoperable path would lead to a change in the market dynamics and competition for small and medium-sized enterprises (SMEs).
As Canada explores the benefits of economic integration under a system of Open Banking, there is a need to examine regulatory differences, market differences, and possibilities for industry collaboration.
The US has adopted a more market-driven approach to its Open Banking journey up until now, while Canada has adopted a more regulatory-led approach, with the FCAC entrusted with the responsibility to implement Open Banking in Canada and the Department of Finance having overall legislative and governance oversight responsibilities.
The CFPB will regulate Open Banking in the US, with rulemaking due to come in later this year.
In summary, while it was established that an interoperable path between Canada and the US is beneficial, there are issues relating to consumer convenience and protection, technology standards and innovation, and market interoperability dynamics that need to be addressed.
Dr Wayne Dowers is commercial credit advisor at RBC
