Global fintech and funding innovation ecosystem

Open banking would help the recovery

Financial Post | Adam Felesky | Jun 5, 2020

lonely bay street - Open banking would help the recoveryOpinion: Open banking infrastructure and data are helping governments around the world better respond to the crisis

Times of crisis confront societies with challenges — in the current crisis, increased unemployment, strained public finances and severe social hardship. But they can also generate opportunities for improvement through policy innovation.

Many of us who are engaged in the discussions around the future of Canadian banking believe such an opportunity is being missed. The planned second phase of consultations by the federal government’s Advisory Committee on Open Banking, which was to look into the merits of open banking and the related data security risks, has now been postponed.

Before COVID-19, these reforms had yet to catch the imagination of Canadian political leaders in the same way they had in the U.K. and Australia, where regulatory regimes now give consumers much more control over their personal financial data. Canada was already late to the open banking party. Now we are even further behind — though the reasons to act quickly have only become more compelling since the onset of the pandemic.


In case anyone had still been in doubt, we are now clearly living in a fully digital economy. In just two months, we have seen almost every sector of our economy become more digitized. Canadians were active users of digital banking channels before the pandemic struck but now lockdown and self-isolation are forcing anyone and everyone online. Payments Canada recently reported that 62 per cent of Canadians are using less cash now than they did pre-COVID, while PayPal says its fastest-growing user base is the 50+ demographic.

At the same time, the challenge facing small businesses looking for financing is only worsening. Before the pandemic, banks were only doing a so-so job lending to small businesses. According to the C.D. Howe Institute, Canada lags far behind its OECD peers when it comes to small business loans. We are at or near the back of the pack in both share of total business lending going to small business and small business lending as a percentage of GDP.

Although the federal government and our banks deserve praise for getting critical funding to companies during the pandemic, many small businesses have been left out of relief programs — either because they don’t meet the requirements or because banks are refusing them based on standard pre-pandemic criteria. Part of the reason companies like Amazon and Shopify have gone into small business lending is that they have key data from businesses (such as cash flow and accounts receivables) that allow them to do it really well. Open banking would unlock this data for small business and let them show it to other potential lenders. We can’t wait for the next pandemic to help out the largest group of employers in Canada.

See:  Shopify Balance Brings Banking and Cash Flow to Merchants

Another reason to act now is the pandemic itself. Open banking infrastructure and data are helping governments around the world better respond to the crisis. Apart from the many ways fintechs are helping consumers, small business and charities battle the effects of the pandemic, we are seeing promising signs of governments starting to use open banking data to help inform their pandemic responses. The Global Open Finance Centre of Excellence (GOFCoE) recently launched a program that uses open banking data from fintechs and other organizations to provide the U.K. government with accurate, regularized, near-real-time insights into how the pandemic is affecting the economy. This data will help the government adjust its policies within days instead of weeks.

Continue to the full article --> here


NCFA Jan 2018 resize - Open banking would help the recovery 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:

Latest news - Open banking would help the recoveryFF Logo 400 v3 - Open banking would help the recoverycommunity social impact - Open banking would help the recovery

Support NCFA by Following us on Twitter!

NCFA Sign up for our newsletter - Open banking would help the recovery


Leave a Reply

Your email address will not be published. Required fields are marked *

4 + sixteen =