Federal Government Continues Crawl Toward Open Banking Framework

Federal politicians have been speaking on the record about open banking since 2018.

Since then, we’ve endured a global pandemic, among other major events.

What hasn’t happened in that timeframe, however, is meaningful progress toward open banking in Canada.

After years of languishing—even as economic rivals around the world march forward—Canada is finally taking the idea of open banking seriously with its 2024 budget (which has stirred controversy for other reasons).

Specifically, the federal budget has earmarked $1 million for the Financial Consumer Agency of Canada, as well as $4 million over three years for the Ministry of Finance.

While the influx of targeted capital is certainly welcome, entrepreneurs across Canada’s financial technology space remain mystified as to why Canada has been dragging its feet for several years without much of an excuse, suggests a report from CBC.

“It’s consumers that are paying a higher price as a result of slower timelines,” Neo Financial cofounder Andrew Chau informed senior reporter Anis Heydari. “With increased competition, naturally you will get better pricing when it comes to bank fees, when it comes to the fees you might pay on borrowing money, or even just earning higher interest rates on your savings.”

Founders and executives agreed that open banking unlocks benefits for both fintechs and consumers with limited downside.

“Open banking means that you and not your bank are in control of your financial information,” stated Hanna Zaidi a vice-president with Toronto’s Wealthsimple, which is vying to become Canada’s next big bank.

Certain private companies have been advancing open banking in Canada on their own accord (such as Montreal’s Zum Rails as well as Flinks), but as experts quoted in CBC agreed, at least some government action is necessary to validate and officialize the framework.

With federal funding in place at last, Canada is perhaps finally poised to make some overdue progress on open banking.

And if so, fintech innovation throughout the country is slated to receive a boost.