On March 22, 2022, the federal authorities introduced Abraham Tachjian as Canada’s new open banking lead. Mr. Tachjian will report back to the Deputy Minister of Finance, and have the help of a secretariat inside the Division of Finance and exterior specialists. Mr. Tachjian is at present the director of digital banking at a significant Canadian skilled companies firm. He beforehand based a digital financial institution in Hong Kong, and acted as authorized counsel to Canadian monetary establishments.
The information comes only a week after the Council of Canadian Innovators printed an open letter to Canada’s Affiliate Minister of Finance with respect to the federal authorities’s lack of progress in the direction of implementing an open banking framework in Canada.
The letter, signed by executives from a few of Canada’s high fintech firms, requested plenty of questions together with:
- Does the federal government plan to implement all the suggestions set out within the Advisory Committee on Open Banking’s ultimate report (“ultimate report”)?
- When will the federal government title a person because the open banking lead?
- What steps is the federal authorities taking to fulfill its aim of launching an open banking system no later than the start of 2023?
Mr. Tachjian’s appointment solutions at the least certainly one of these questions and is extensively thought to be a critically vital growth, as it’s envisioned that he shall be accountable, as open banking lead, for creating the frequent guidelines, accreditation standards, and technical requirements for Canada’s open banking system.
Notably, nonetheless, the announcement is silent with respect to the 2023 implementation goal date. Furthermore, whereas the announcement states that Mr. Tachjian’s mandate is to develop an open banking framework “based mostly on the suggestions within the ultimate report”, it doesn’t verify whether or not the federal government plans to implement all the ultimate report’s suggestions.
Open Banking Overview
Open banking is a regulatory framework that permits people and companies to securely and securely share banking and transaction knowledge with approved third events. By enabling protected and safe entry to data, open banking would permit fintechs to develop a brand new suite of helpful monetary companies apps and merchandise for the good thing about people and companies. As recognized within the letter, there are clear pro-competitive advantages to open banking in Canada.
We’ve been following the event of open banking in Canada intently because the idea first began to realize traction in 2019.[1] We summarized the ultimate report in August 2021 and printed a deep dive on the privateness and knowledge safety implications of an open banking framework in Canada in October 2021.
Most just lately, we summarized the outcomes of an Open Banking Expo survey on stakeholder responses to the ultimate report in December 2021. These outcomes demonstrated that greater than half of stakeholders believed that the federal authorities’s early 2023 deadline for launching an open banking framework was unrealistic.
What’s Subsequent?
Even with the appointment of an open banking lead, it’s probably that many stakeholders will stay skeptical that Canada can obtain the timeline initially envisioned by the Advisory Committee.
The ultimate report proposed an 18-month timeline for the preliminary part of implementation throughout which era the open banking lead, with the assistance of technical specialists, would design the mechanics of an open banking system, and third get together service suppliers may search accreditation and take a look at their knowledge switch processes. The Advisory Committee didn’t ponder shopper entry till after these steps had been full.
The gradual progress in the direction of implementing a Canadian open banking system to this point has offered privateness and safety challenges for shoppers sharing their monetary knowledge by different means. As the ultimate report notes, many Canadians at present share their monetary knowledge by “display screen scraping”, whereby shoppers share their login data with third get together service suppliers to be able to obtain sure companies or advantages. With out significant development in the direction of the implementation of a Canadian open banking system, the potential safety vulnerabilities and legal responsibility dangers posed by display screen scraping and different various technique of sharing delicate monetary knowledge are prone to persist.
Immediate growth of Canada’s open banking system may also assist to cut back the frustration of fintech firms, who might resolve to focus their efforts and sources on constructing services for different jurisdictions, akin to Australia and Europe, the place open banking frameworks are extra developed. Alternatively, if the federal government had been to fast-track the launch of an open banking framework to fulfill its 2023 goal date with out offering sufficient time for growth and testing, this might result in extra privateness and knowledge safety points, which can hinder long-term shopper confidence in Canada’s open banking system.