A recent survey by the Financial Consumer Agency of Canada confirmed what we already knew: that Canadians’ awareness and understanding of open banking remains low, despite the Canadian government’s strides toward implementing this financial innovation.
Open banking, as an emerging trend in financial services, lets consumers securely share their financial data between banks and accredited fintechs, thereby fostering a more personalised banking experience.
But according to the FCAC’s survey results, only 9% of Canadians had heard of open banking. Furthermore, a testing of open banking-related knowledge among the minority who were aware of it revealed substantial gaps in understanding. For instance, only 21% correctly stated that open banking doesn’t yet exist in Canada.
Even after defining open banking, 52% of the survey respondents claimed they wouldn’t use it. A further 29% remained uncertain, while a mere 15% indicated their interest in utilizing open banking services. Overall, Canadians distrust new fintech.
But how much does this really matter? It depends.
If we pry “adoption” from “awareness,” we may be able to more accurately target resources toward advancing open banking in Canada, experts posit. Increasing adoption of open banking is of course essential but some argue that maximizing awareness of specific details around open banking may be misdirected energy.
For example, implementing consumer protection measures within the open banking framework would likely increase adoption, according to the report, which is good. These measures included full protection from losses, the ability to revoke data sharing consent at any time, reporting of data breaches, and enforcement of standard security requirements.
Recommendations from the FCAC for fostering consumer understanding of open banking included offering unambiguous information about benefits and risks. It’s believed that empowering consumers to have control over their data and offering recourse for adverse effects may lead to greater participation in the open banking framework. Again, good.
But interpreting the findings, experts at business law firm McMillan emphasized that while adoption of open banking is critical, awareness may not be so. Just like not every consumer knows the detailed processes of banking services like wire transfers, they don’t necessarily need to understand every nuance of open banking to benefit from it.
Low awareness may also be temporary, as it is trending upward.
As Canada continues to pave the way for open banking, “It will be interesting to see what model of educational program the Government of Canada adopts,” the McMillan blog post reads. “As has been the case in other jurisdictions, financial institutions may need to undertake a conceptual shift to think of financial data as belonging to the consumer, which may pave the way for a smoother transition.”
A framework for open banking tailored to the Canadian context is expected to be unveiled by the end of this year, promising exciting developments in the Canadian financial sector.