Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl
Finconecta | Betty DeVita | Dec 3, 2021
The Open Banking model marks a global evolution (although some experts talk about a “revolution”) in the financial market. Motivated by the increased
need to respond to customer demands, compete with new financial players and meet regulation requirements, banks are adopting API-based business models. Open Banking emerges in the financial industry as a new model of collaboration with third-party providers. By working in partnership with fintech banks, they are able to expand customer reach, accelerate the adoption of new technologies, and create new revenue streams. The underlying mindset is the realization that complex problems that demand immediate resolution, need a strategy that taps into “the wisdom of the many”, rather than siloed proprietary solutions.
While, in some countries like the US and China, Open Banking is spreading only by market forces, in other geographies the regulatory agenda is playing a central role. In Europe, some Asian and Latin American regulators, often driven by financial inclusion mandates, are promoting the shift to open ecosystems by launching directives like the well-known PSD2 in Europe and the Open Banking Standard in the UK.
See:
Privacy Implications of an Open Banking System in Canada
Canada’s Library of Parliament Report: A Comparison of Open Banking Recommendations
Taking into account these regulatory successful practices, the government of Canada appointed an Advisory Committee (AC) in 2018 for the design and implementation of the Open Banking framework. As a first phase, the AC started with consultations with stakeholders across Canada. Based on its findings, in spring 2020 the committee started the second phase, providing advice on potential solutions and standards focusing on data.
Bringing together the government and the private industry, Canada is aiming to embrace a hybrid, made-in-Canada strategy. The scope is ambitious as all federally regulated banks will be required to participate while others regulated banks could join on a voluntary basis. Despite some delays due to the pandemic, the AC plans to have the Open Banking regime operational by January 2023.
Canada's Open Banking Phased Implementation Plan
Live Date January 2023
While the regulation is cautiously but steadily progressing in Canada, leading banks are already partnering with FinTechs using APIs to deliver new digital products. Even later adopters are exploring new technologies as COVID-19 forced them to respond, adapt and innovate. As far as fintechs are concerned, they have gained attention by proving to be the solution to navigate the crisis.
According to Accenture, Fintech Report 2020, the Canadian FinTech industry is booming with 700 FinTechs and hundreds of nascent startups. Registering record levels of investment, venture capitalists remain optimistic despite COVID-19 uncertainty. The potential of the Canadian ecosystem is massive, especially when
considering the proactive approach taken by an efficient public sector. That explains the surge of many Canadian unicorns, like Clearco, a lending platform, Coveo an AI platform and Wealthsimple, an online investment manager, to name a few.
See: Betakit podcast with Senator Deacon on Open Banking and Competition
Going beyond the Open Banking model, the Canadian financial sector is also benefiting by innovative collaborative structures like Banking-as-a-Service and Embedded Finance. As an example we have Hopper, the travel mobile-only app that uses predictive analytics to make travel recommendations. This Canadian unicorn, recently awarded as the Best Travel App, provides information about best deals on flight and hotels, sends push notifications to their users when best prices are available, suggests new destinations based on your search and most importantly allows the payment for all travel services through one single interface.
Open Banking can and should be a journey towards digital innovation. As FinConecta’s Chief Business Officer Betty deVita remarks: “Infrastructure is sexy” (and now it is trendy!) . There has never been a better time for enabling new business models. In March 2021 Amazon Web Services (AWS) and FinConecta launched Open Finance, a leading-edge platform based on FinConecta’s technology, that expands the boundaries of Open Banking to the next level”, deVita adds. “And now we landed in Canada, as the engine behind tunl., an API platform that brings together Financial Institutions and Fintechs” (To learn more about Ficanex and FinConecta’s joint launch of tunl 2.0) Banking-as-Service goes beyond the data sharing contemplated in Open Banking, including products that are embedded into the financial institution's own core, such as infrastructure, data and banking licenses on a white-labeled basis.
The future is open and Canada is ramping up. We anticipate dramatic changes in 2021 pushed by the FinTech sector growth and the regulatory framework. If financial institutions were contemplating digital transformation as a “nice to have”, now is a must-have shift.
See: Reflections on Canada’s open banking report
Bottom line is, great things are to come in Canada. A flurry of fintech activity is gaining traction, bolstering the ecosystem.This API economy opens new horizons for all types of institutions, by enabling collaboration and the co-creation of new solutions leveraging what others have available, in a robust, interconnected and integrated roadmap.
As the old adage says: “If it’s not here, where; if it's not me, who; if it’s not now, when.”
Authored by:
Betty DeVita, CBO, FinConecta
Betty is a global digital transformation executive with expertise in consumer financial services/payments. Her focus is on early-stage and emerging companies driving value creation, partnerships and the path to global scaling. She most recently served as Chief Commercial Officer of Digital Payments & Labs at MasterCard. She also served as President at MasterCard Canada. Prior to that she was with Citi in Latam, the US and Asia in their consumer franchise and left Citi as Chair/CEO for Citibank Canada Inc.Betty sits on the board of Molson Coors Brewing Company (NYSE: TAP), where she sits on the audit committee. She holds a Bachelor of Science from St John’s University, a CEO Certificate from the WhartonKMA in South Korea and is a certified director from the Institute of Corporate Directors, University of Toronto
This article is featured in NCFA's digital magazine, Fintech Confidential (Issue 4 Oct 2021). Click to read the latest thought leadership, insights and trends about Fintech in Canada:
Checkout NCFA's digital magazine, Fintech Confidential (Issue 4) --> here
The 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, 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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