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Reflections on Canada’s open banking report

Paytechs of Canada | Alex Vronces | Aug 2, 2021

glass ceiling - Reflections on Canada’s open banking reportThe report neglects write access

As expected, the advisory committee has recommended that Canada focus on implementing read access at launch and write access in a later phase of open banking. Read access lets consumers and businesses share their financial information with fintechs, while write access lets them authorize fintechs to act upon it — by opening a new bank account, for example, or moving money from one account to another. The advisory committee’s timeline suggests that we shouldn’t even begin considering write access until 2023.

This is a mistake of import. As the Competition Bureau has said, Canada will see more competition and innovation in the financial sector if we make the movement of money between financial institutions more seamless, empowering Canadians to better vote with their dollars. Write access, if done right, will make the movement of money more seamless than ever.

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I’m not saying write access should be turned on at the same time read access is. The advisory committee is a sage assembly. They know that they risk getting nothing if they ask for too much. That’s why they even suggested starting with a limited scope of read access to financial information. Write access — because we’re talking about the movement of money — comes with more risk and complexity, which, according to the advisory committee, would delay the roll out of open banking.

So if now’s not a good time to consider write access, then when is?

The devil is in the (implementation) details

The first is that this is just a report and it’s still up to the federal government to act on the recommendations. Though there’s no reason to think the federal government won’t, there’s no reason to think it will. Minister Freeland’s statement in support of a “regulated, made-in-Canada system” is reassuring, but such a system can take many shapes and sizes, and promises are just promises for a sector that has seen so many go unfulfilled.

The second is that the advisory committee’s recommended timeline is looking increasingly uncertain.

For one, open banking is already behind schedule. The report was dated April, but the report was released in August. With a proposed go-live of January 2023, we should have already delivered one of the report’s foundational recommendations by now: appoint a “tsar” to work with the relevant players to make progress on the first phase of open banking.

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If I had to bet, I’d say the timeline is going to look more and more uncertain as time goes on. With an impending election, we’re going to lose another few months of valuable time. On top of that, the report mentions a few things that could further delay the implementation of a “regulated, made-in-Canada system,” including “existing legislative or regulatory impediments.” As we all know, there’s no upper bound on how long legislative and regulatory change can take.

Tough practical and political choices will need to be made. The cynic in me suspects that these trade-offs will be made behind closed doors, as push comes to shove in the negotiations between banks and the government. Whether they’ll be made to open banking’s favour or detriment is to be determined.

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