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Big changes are coming to how Canadians bank

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Toronto – Canada is about to witness a long-awaited revolution in banking. There will be significant changes to banking, implementation is probably going to be slow.

Under a move known as “open banking,” Canadian businesses and consumers will soon have much more control over their financial information, including who they share it with.

Open Banking

Open banking allows people to share their banking information with third-party companies. This feature is especially helpful when using money management or budgeting apps, which combine multiple bank accounts into one place.

It also makes,

  • Automated accounting
  • Simpler payments
  • Better business finance management

The federal government has promised to introduce framework legislation in the budget for next month, bringing the system to Canada.

With open banking, lenders can access a more extensive set of financial data, including transaction history and account balances. This allows for a more holistic assessment of an individual’s financial health and creditworthiness, potentially leading to more accurate lending decisions.

According to Abhishek Sinha, national banking technology leader at EY Canada, the model—which the federal government refers to as consumer-driven banking—is a part of a larger movement to give consumers more control over the data companies are collecting about them.

I believe fintech community will have a very difficult time gaining trust in Canada. According to Aris Bogdaneris, head of Scotiabank’s Canadian banking, during an investor day in 2019, the system also saw a relatively low uptake when it was introduced in Europe in 2019.

In the UK, it was first introduced in 2018. According to Open Banking Ltd., the organization in charge of putting the system in place there, as of last June, only roughly 11% of British consumers were using open banking.

Adoption in Canada is probably going to be slower due to higher bank concentration and a more conservative banking culture.

How can open banking benefit you?

Your password and username for online banking are not required. Rather, you permit your bank to securely transmit your financial information to the fintech application on your behalf.

You avoid running the risk of losing your security against unauthorized transactions by keeping your password and username private.

You could get several additional advantages from open banking, including:

  • Accessing all of your financial accounts, goods, and services in real-time from one location.
  • Having all of your information in one location makes it easier to prove to loan providers that you are creditworthy.
  • Being able to choose from a greater selection of practical, affordable, and consumer-friendly financial services and products that satisfy your needs.
  • Having quick and simple access to goods and tools that are tailored to you to help you become financially healthier.

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