Open Banking, known in Ottawa as consumer-driven banking, aims to allow individuals and businesses to securely share their financial data with third-party service providers outside traditional banks. This initiative could enable users to consolidate information from various institutions into one interface, assisting renters in building credit histories through their rental payments.

The first legislative step was initiated approximately a year ago as part of the 2024 federal budget. This move tasked the Financial Consumer Agency of Canada (FCAC) with developing and overseeing the Open Banking framework. However, further legislation is needed to establish accreditation procedures for fintechs and set unified standards for financial institutions.

Delayed Implementation Sparks Concerns

Despite initial momentum, the pace of implementation has slowed. The recent federal election and lack of a spring budget have left many observers unsure about the government’s priorities. Although the governing party retained power, its platform did not mention consumer-driven banking specifically.

Officials from the National Bank of Canada reported that progress appears to have stalled due to delays related to elections and noted a need for clarity on how the framework will be structured. The bank has developed its own Open Banking solution, enabling fintech firms to securely access data with user consent.

Without a regulated system in place, data sharing between consumers and fintechs continues largely through ‘screen scraping,’ a method where users share login credentials with third parties. Critics argue that this approach lacks detailed control over the data accessed, raising privacy and security concerns. According to representatives from the National Bank, a regulated Open Banking framework would offer better oversight of shared information and clear guidelines on its use.