Open Banking in Canada faces legislative delays

Open Banking, referred to by Ottawa as consumer-driven banking, is intended to allow individuals and businesses to securely share their financial data with third-party service providers beyond traditional banks. The framework could, for instance, enable users to consolidate financial information from multiple institutions into a single interface and assist renters in building credit histories based on rent payments. 

The initial legislative step was taken roughly a year ago as part of the 2024 federal budget. This legislation tasked the Financial Consumer Agency of Canada (FCAC) with developing and overseeing the Open Banking framework. However, additional legislation is still required to set out accreditation procedures for fintechs and establish unified standards for financial institutions to follow.

Lack of legislative follow-through raises concerns

Despite early momentum, the pace of implementation has since slowed. Canada's recent federal election and the absence of a spring budget have left observers uncertain about the government’s priorities. Although the governing party remained in power, its election platform did not include specific references to consumer-driven banking. 

Officials from the National Bank of Canada stated that progress appears to have stalled due to election-related delays and noted that the sector is lacking clarity on how the framework will ultimately be shaped. The bank has taken steps to develop its own Open Banking solution, allowing fintech firms to securely access data with user consent. 

In the absence of a regulated system, data sharing between consumers and fintechs continues to rely heavily on ‘screen scraping,’ a method in which users provide login credentials to third parties. Critics point out that this process lacks granular controls over what data is accessed, raising privacy and security concerns. According to representatives from the National Bank, a regulated Open Banking framework would allow more precise control over shared information, with clearer boundaries on data use.