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Minister Finance Chrystia Freeland has the blueprint to revolutionize Canadian banking — when will it be used?

Financial Post | Kevin Carmichael | Jun 7, 2021

Finance Minister Chrystia Freeland - Minister Finance Chrystia Freeland has the blueprint to revolutionize Canadian banking — when will it be used?Sense among advocates of 'open banking' that things are finally moving

Finance Minister Chrystia Freeland has in her possession a blueprint that could revolutionize financial services.Earlier this spring, Freeland received recommendations from a group of Bay Street operatives handpicked by the Prime Minister Justin Trudeau’s government to consider whether Canada should follow the lead of countries such as the United Kingdom and Australia and allow consumers to control their financial data.

The policy is known as “open banking” and it could provide a competitive shock to a banking system whose idea of competition is engaging in price wars over the issuance of government-backed mortgages. The review has been so slow in coming to what many say are foregone conclusions that some have wondered if the big banks are doing their best to stand in the way of progress. Whatever the reason for the slow going, any delay from this point on will have everything to do with Freeland herself, as she now has all the information and context that she needs.

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“From what I understand, the advisory committee, made up of some very sharp people, have delivered their report to the minister and it’s with the minister, but that is a black box that I can’t see into,” said Dan Dickinson, chief information officer at Equitable Bank, Canada’s ninth-biggest lender, which runs a digital-only deposit-taking platform.Dickinson’s comments are significant because it was unclear whether the review was progressing or if it had been waylaid by the pandemic. A new round of consultations was postponed a year ago, as the COVID-19 crisis crowded out other priorities.

“We’re in the camp of believing it’s going to come, but it’s probably going to happen more slowly than we would like it to happen,” Michael Katchen, founder and chief executive of Wealthsimple Technologies Inc., told the Financial Post’s Stefanie Marotta last month. “So we’re building our business the way we ought to build it, with the tools we have today. But we would love to see open banking come to Canada and we think it would be a wonderful thing for the industry.”

Morneau seemed to like the idea, saying in the 2018 announcement that Prime Minister Justin Trudeau’s government wanted a financial system that “promotes competition and consumer choice.” For all its strengths, Canada’s banking oligopoly isn’t known for promoting either of those things aggressively. The legacy banks have attempted to dull enthusiasm for open banking over the years, arguing that a hasty embrace of such a regime could threaten privacy and expose financial institutions to cyberattacks.

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The big banks appear to have had some success slowing down the process. Freeland’s office declined to state explicitly that the minister has received the report.

“As the financial sector is becoming increasingly digitized, and to ensure the privacy and security of Canadians, the government is reviewing consumer-driven finance, or open banking, in Canada,” Katherine Cuplinskas, the finance minister’s press secretary, said in an email. “An advisory committee on open banking has been appointed to conduct this review and to provide advice on potential solutions and standards to enhance data protection in the financial sector. The advisory committee’s report will be released in due course.”

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