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Canada’s Open Banking Framework 2024 Preview

Open Banking | April 16, 2024

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Will Canada's Open Banking Framework be tabled in the 2024 federal budget as promised?

As Canada stands on the cusp of adopting open banking, the financial sector and consumers alike await the specifics of the framework that will dictate the future of banking in the country. The answers to these questions will not only shape the regulatory landscape but also determine how effectively Canada can leverage technological advancements to foster a more inclusive and competitive financial environment.

What Questions Will Be Answered?

  1. How stringent or flexible will the accreditation criteria be for entities that wish to participate in open banking? There's a balance to be struck between protecting consumers and not excluding a broad range of market participants.
  2. What measures will the government implement to ensure the security and privacy of consumer financial data? Comparisons may be drawn with other countries like Australia, which uses strong encryption and security standards.
  3. What technical standards will be adopted? Will Canada align with international standards to ensure global interoperability?
  4. What mechanisms will be in place to monitor and enforce compliance with the open banking rules? This includes who will oversee these rules and how they will do so.
  5. What will the structure of the governing body look like? Will it be an independent entity, a government agency, or a hybrid model involving various stakeholders?
  6. What level of regulatory oversight will the governing body have? How will it enforce compliance among participants?
  7. How will consumer interests be protected in the open banking framework? What mechanisms will be put in place to address consumer complaints and disputes?  How will liability be addressed, particularly in cases of data breaches? Clear attribution of responsibility is crucial for maintaining trust in the open banking system.
  8. What role will the governing body play in educating consumers and businesses about the benefits and risks of open banking?

Open Banking Will Benefit Consumers and Businesses

Open banking is poised to transform the Canadian financial landscape by allowing banks and fintechs to share financial data securely and efficiently under a customer's consent.

See:  Open Banking: Revolutionizing Financial Data Sharing

This system is designed to empower consumers, offering them greater control over their financial data, facilitating easier bank switches, and enabling innovative financial services.

Consumer Examples

Product/ServiceExampleDescriptionGen ZMillennialsBoomers
Personal Financial Management ToolsMintAllows users to consolidate financial data from various sources for better budgeting and financial planning.HighHighMedium
Automated Savings AppsAcornsRounds up purchases to the nearest dollar and invests the difference in diversified portfolios.HighHighLow
Debt Management SolutionsTallyAutomates credit card debt payment, ensuring the optimal payment strategy to save on interest.MediumHighHigh
Credit Score MonitoringCredit KarmaProvides free credit score updates and suggestions for credit improvement.HighHighMedium
Bill Management and OptimizationTruebillHelps users manage subscriptions and track bills, negotiating better rates on their behalf.MediumHighMedium
Robo-Advisors for InvestmentsWealthsimpleOffers automated investment management based on personalized risk assessment.HighHighMedium
Enhanced Loan and Credit OfferingsLendingTreeAggregates loan offers from multiple lenders based on user’s financial profile for best rates.MediumHighMedium
Streamlined Mortgage ApplicationsBetterUses real-time financial data to streamline mortgage applications and approvals.LowHighHigh
Insurance Premium OptimizationMetromileUses driving data and personal information to offer customized car insurance pricing.MediumMediumHigh
Smart WalletsRevolutManages multiple currencies and bank accounts, offering budgeting and cryptocurrency exchange.HighHighLow

Business Examples

We can categorize businesses into small, medium, and large enterprises and rank the importance of each service for these business sizes.

Product/ServiceExample FintechDescriptionSmall BusinessMedium BusinessLarge Enterprise
Cash Flow Management ToolsFloatProvides real-time cash flow forecasting and scenario planning for businesses.HighHighMedium
Automated Accounting SystemsQuickBooksIntegrates banking data directly into accounting software for real-time bookkeeping.HighHighMedium
Supply Chain Financing SolutionsTauliaOffers supply chain financing options that enhance working capital management.MediumHighHigh
Business Credit ScoringExperian BusinessUtilizes real-time financial data for more accurate business credit scoring.MediumHighHigh
Payment Initiation Services (PIS)GoCardlessFacilitates direct bank payments, reducing transaction fees and processing times.HighHighHigh
Enhanced Fraud Detection SystemsKountUses open banking data to enhance fraud detection and prevention systems.MediumHighHigh
E-Invoicing and PaymentsTradeshiftStreamlines invoicing and payments processes, improving cash flow.MediumHighHigh
Dynamic Pricing ModelsPricefxUses financial insights to adjust pricing in real-time, enhancing profitability.LowMediumHigh
Employee Expense ManagementExpensifyIntegrates with banking data to track and manage employee expenses more effectively.HighHighMedium
Customized Financial Advice and ProductsKabbageOffers flexible lines of credit and other financial products tailored to business needs.HighHighMedium

Learn More from NCFA Canada's thought leadership series titled "Canada’s Open Banking Journey"

Expert interviews and insights focused on establishing a made-in-Canada open banking regime. The series aims to contribute to shaping a system that will significantly change how financial services are created, distributed, and consumed in Canada over the coming decades.


Select Episodes

1. The Foundations of Open Banking

Jul 15, 2021:  Interview with Simon Redfern, Founder of the Open Bank (Germany)

Episode: Explore the origins and impact of open banking standards globally with Simon Redfern. Learn how these frameworks can drive innovation and transparency in financial services. More

2. A Global Bank's Perspective

Sep 20, 2021:  Interview with Carmela Gomez Castelao and Jose Luis Navarro Llorens, BBVA (Spain)

Episode:  Discover BBVA's strategic approach to open banking across its global operations, highlighting the balance between innovation and customer security. More

3. The API Ecosystem

Dec 1, 2021:  Interview with Huw Davies, Ozone API (UK)

Episode: Huw Davies explains the importance of robust API standards for fostering a secure and interoperable open banking ecosystem. More

4. Consumer-Centric Financial Solutions

Jan 15, 2022:  Interview with Søren Nielsen, Subaio (Denmark)

Episode: Søren Nielsen shares how Danish fintech Subaio focuses on consumer empowerment through open banking, enhancing financial management tools. More

5. Fintech Integration and Innovation

Mar 22, 2022:  Interview with Abe Karar, Fintech Galaxy (UAE)

Episode: Explore the integration of open banking with fintech ecosystems, highlighting innovations and new product development. More


NCFA Jan 2018 resize - Canada's Open Banking Framework 2024 PreviewThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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