The Advisory Committees’ main concern appears to be eliminating the prevalence of financial data screen scrapping. The report recommends that the initial scope of Canada’s Open Banking system should be limited to data currently available to consumers and small businesses via online banking, and comprise read-only activities. Derived data would also be excluded.
The Advisory Committee recommends that this limited initial phase of Open Banking would become operational by January 2023.
Open Banking, or consumer-directed finance (CDF), refers to a framework where consumers and businesses have the right to their financial data and can authorize third-party financial service providers to access their financial transaction data securely, as well as give authorized third-party financial service providers the ability to initiate payments on their behalf, all through APIs.
An approximation of Open Banking is already well underway in Canada, with the Advisory Committee on Open Banking’s report on phase-one consultations noting that as many as 4 million consumers are sharing their financial data with third-party financial service providers, albeit insecurely, through screen-scraping. But Canada is lagging behind others, such as the UK, Australia and the European Union, in developing a formal Open Banking system.
The report comes more than two years after the federal Ministry of Finance announced it would launch consultations on Open Banking. The report has long been anticipated by members of the Canadian financial innovation community, who are looking for regulations that support innovation and competition in the landscape.
The final report calls for the federal government to address screen scraping and replace it with an Open Banking system that is “safe, regulated, efficient, and protects [consumers’] interests.”
More details regarding the report, next steps, recommendations, phased approach, accreditation etc here.
