Canada divided on open banking drive

“We do need regulation and the reason for that is not for regulation sake,” said Sue Britton, CEO of Fintech Growth Syndicate, on a panel at the 2020 Open Banking Expo Canada.

Suggestions that the government had resumed consultations into open banking were shared on Twitter by Senator Colin Deacon for Nova Scotia at the beginning of November.

“Setting a time frame is good for everyone, especially for those that don’t currently have access to the markets like some of the newer entrances. Participation, making sure that we have the ability for everyone to participate and frankly the requirement for everyone to participate.

“Regions where [Open Banking] has not been regulated have led to an unlevel uneven playing field.”

However, not all on the panel agreed.

“Canadians want to see a system that has the benefits of being fourth or fifth [Open Banking implementation] by watching colleagues of ours in other geographies and avoiding unintended consequences, said Rami Thabet, vice president of digital product at RBC.

“One of the unintended consequences of a regulatory framework is of potentially stifling innovation, market momentum and moving at the speed of our regulatory scheme. From what we’ve all seen come to play, this is usually not measured in the number of months and weeks but measured in timeframes of half a decade to a decade.

“Let’s make sure we’re not trying to create a cottage industry out of something that five years from now, after we’ve built a wonderful system that has all the learnings from our global counterparts find out that consumer demand has shift on us.”

Canada currently lacks an open banking framework as seen in the EU through PSD2 or in the UK in the Conduct Market Authority’s (CMA) Open Banking Initiative, which regulates what data can be shared between financial institutions.

Mayank Mishra, managing director and global head of digital channels at Citi said that most global examples point to the need of a regulatory framework.

“On the success that open banking has seen across the globe, I think barring China and in some aspects the US, the market driven construct unless it’s supported by the regulator’s has had limited success.”

He believed that regulations were most helpful when they set a common standard.

“The market requires standards for APIs. The market also requires standards for data security, privacy, and also around identity and consent management. Regulators do need to step in because I think some basic foundations are important for every market”.

Britton said security and consent must be paramount.

“Security is something that, we’re probably all going to be better off, both as individuals and as business leaders, if we actually own our own security. If we learn what sharing information is all about and are allowed to make that choice.

“I may be happy to make the choice to use a service that shares my data and it means I’m going to get spammed with stuff. But give the consumer that ability to make that choice and then the ability to move their data around as a result.”