A Fireside Chat on Open Banking in Canada

Reading Time: 5 min

In June, Flinks had the pleasure of hosting an online fireside chat as part of Flinks Engage. Stephane Bousquet, Leader for Open Banking and Digital ID at National Bank of Canada, Cathy Ly, Vice-President, Customer Experience and Digital Banking Operations at EQ Bank, Adam Gibson, GM of Open Banking Products at Flinks and Simon Wahl, VP of Marketing at Flinks, came together to share their expertise and insights on the state of Open Banking in Canada.

The panel began by recapping their key learnings from Open Banking Expo before going on to discuss the current landscape of Open Banking in Canada. The discussion highlighted integral points for Canadian businesses to consider, with participants sharing their firsthand experiences implementing Open Banking frameworks.

Let’s take a look at some of the important takeaways from the discussion:

Momentum, alignment and excitement

The increase in attendance at Open Banking Expo Canada was encouraging for everyone on the panel. Cathy noted, seeing “more senior leadership from some of the big banks,” and “that I think the big banks are realizing it’s a matter of when [Open Banking happens], not if.”

Stephane’s read from the Open Banking Expo echoes Cathy’s, finding “that we’re now in a place where we’re hitting a pretty good momentum collectively as an industry. And when I’m saying industry, it’s capital and industry, not just the banks. It’s encouraging to see other FIs joining in from a data provider perspective and working towards standing up their capabilities.”

He goes on to say that when it comes to Open Banking in Canada, “that we’re at a place right now where there are no major areas of discord.” Besides the unknowns of Canada’s regulatory framework he finds it “very reassuring to see that as a broad industry, we are aligned on the path forward, we have momentum and so I think we’re in a very good place to start building up that system in early 2024.”

Adam pointed out that the inertia of the past few years can be overcome “once banks start to make a move, that’s really when we’re going to start to see more industry traction moving towards Open Banking. But inertia is still definitely a big hurdle that’s needed to get over.” His view is that “we kind of need just a little bit of a push. If that’s from big banks, if that’s from regulators, if that’s from whomever else. There’s a ton of folks that are getting ready on the sidelines that are almost ready to pull the trigger on launching their Open Banking.”

Outlook is positive

Financial institutions, Fintechs and data aggregators are already working together to implement and launch data sharing programs. Stephane notes that “we’re seeing different organizations putting forward Open Banking capabilities or capabilities that apply to the principles of Open Banking…once government starts rolling out more explicit directives, it’ll just be a question of adapting existing scope that’s in market, adapting to whatever accreditation mechanism or accreditation system that will be put out there.”

Adam also points out that many FIs are getting behind the idea of securely sharing banking data without sharing credentials and also letting users connect to a wide variety of applications, as long as they can prove that they meet certain security or rigorous thresholds. For Adam, “the really encouraging thing that I heard when talking to banks and credit unions is there’s a really good kind of willingness to fall behind, more or less whatever these new [government] guidelines are going to be and not let perfect be the enemy of good. Let’s pick something, let’s run with it.”

Importance of use cases

Open Banking is an easy sell as long as use cases are communicated effectively.

Cathy points out that hesitancy can be overcome by providing tangible examples of how Open Banking can positively impact users. She specifically hopes that “at least personal banking balances and transactions” can be included so that “Fintechs, as well as the other FIs, can start really producing customer-facing use cases that are very valuable.”

Cathy goes on to note that “providing relevant use cases is going to be a puzzle that we have to solve as an industry if we want to bring more consumers on.” Cathy then explains “when you sort of frame the question around problems to be solved or use cases, we actually see very favorable sentiment.”

Just like AI can be confusing for consumers because of its breadth of scope, Adam notes that the same can be said for Open Banking. “When you ask the question, are you aware of Open Banking? Would you like to do Open Banking? Obviously the research results are going to be pretty anemic. But actually the use cases themselves, I think there’s a lot of demand for them.”

Adam summarizes the conversation best when he points out that “Consumers care about the value proposition. They don’t need to and shouldn’t care about or shouldn’t be experts on anything behind the scenes. That’s why they trust their financial institutions and other entities to take care of this stuff for them.”

Canadian Open Banking is unique

The Canadian Open Banking model is distinctive and draws inspiration from government-led as well as industry-led frameworks. Adam and Cathy both highlight the fact that competition in the United States has sped up Open Banking adoption and seen the industry shape the frameworks there. Adam highlights the fact that there is no right or wrong way of implementing Open Banking, but that progress in the United States shows “that it is possible to have banks individually make movements that can drive value to their customers.”

Stephane hits the nail on the head when he says that “since day one it has been stated that the Canadian model will be distinctive. And the goal is that the system that we establish is a hybrid model.” He goes on to say “the plan isn’t to go full government led à la UK and on the opposite end, it’s not to go full industry led à la US,” but to be a mix that draws the best from both existing systems.

Start now

Open Banking implementation should be done in parts. Identify the immediate value and a business use case to start and continue expanding Open Banking capabilities over time. Adam believes “once you start to see two, three, four more banks come on board, you’re going to start to see a lot more of these use cases emerge, especially from more typically risk averse organizations that are basically on the sidelines.”

Stephane goes further, reminding listeners that “Open banking is a thing today and has been for years. Data is flowing from FIs to third party apps. So our mutual customers are porting their data in a way that is not ideal, that yields less than optimal customer experience, and there are risks tied to the status quo.” He goes on to say, “we have sufficient building blocks or elements in place to move forward. Does moving forward mean that somewhere down the road maybe a course correction will be required to adapt to whatever regulation or whatever rules will apply in 2024 forward? Maybe. But these future actions are less impactful than doing nothing today.”

Cathy says, “for anybody that is still kind of doubting the technology side of it or overwhelmed by how to tackle it from a technology perspective, I actually think that’s well solved by many of the aggregators. So contact your local friendly aggregator today.”

Click here to watch the entire panel discussion.