The Department of Finance is requesting input from the public and other stakeholders on a consultation paper entitled A Review into the Merits of Open Banking (Consultation Paper). The Consultation Paper seeks to affirm support for developing an open banking framework in Canada that will enable consumers and businesses to authorize third-party financial service providers to access their financial transaction data. While an open banking framework is likely inevitable, stakeholders may use this opportunity to help shape the framework and ensure that it addresses the risks open banking poses as well as the benefits.

The bulk of the Consultation Paper explains open banking as a concept and outlines the benefits for consumers, financial institutions and fintechs alike. In particular, the potential gains in innovation, efficiency and diversity that will result from an open banking framework in Canada are extolled. The Consultation Paper also lists some potential risks of open banking, focusing in particular on the cybersecurity and privacy breach risks that arise when personal and financial information is shared across multiple platforms.

The federal government announced its intention to study open banking in February 2018 in its Budget 2018. A four-person Advisory Committee on Open Banking (Advisory Committee) was appointed later in September 2018 to lead a two-phase consultation. The present Consultation Paper is part of the first phase, in which the benefits of open banking are evaluated and, presumably, the Advisory Committee will determine whether the benefits of open banking outweigh the risks. Suggesting the outcome of the first phase is a foregone conclusion, the second phase will assess implementation considerations and is expected to be held later in 2019.

Canada is certainly not the first jurisdiction to investigate open banking – the United Kingdom, Australia and the European Union, among others, have already begun implementing open banking in scheduled phases. While Canada's open banking framework may build on the lessons learned from other jurisdictions, to succeed it will need to take into account Canada's unique regulatory environment and market structure. Maintaining the stability of Canada's financial services industry and information security is critical in order for the many benefits to be realized by consumers, fintechs and financial institutions.

Any comments on the Consultation Paper must be provided no later than February 11, 2019 and can be sent by e-mail to fin.OBBO.fin@canada.ca or by regular mail to:

The Advisory Committee to the Open Banking Review/Financial Institutions Division
The Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5

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