Canada Can’t Afford to Wait for Open Banking

Canada is at risk of becoming the last G7 nation to implement open banking. The federal government has announced a launch target of early 2026. While this commitment is welcome, the timeline is far too slow – and the cost of delay is mounting. Consumers are paying higher prices, facing fewer choices, and missing out on innovative fintech tools that could improve financial inclusion and resilience.

Open banking gives consumers control over their financial data, enabling them to securely share it with apps and services that help with budgeting, debt management, credit access, and other vital tools. It helps people switch banks more easily, access lower-cost services, and build stronger financial profiles – particularly for people overlooked by traditional lending systems.

The benefits are already being realized abroad. In the United Kingdom, open banking adoption has grown from 3 percent in 2020 to 14 percent by 2024. Many users are unaware of the term itself, but they’re enjoying the advantages of the technology that powers it. Australia has gone even further, extending secure data-sharing rights to sectors like energy and telecommunications.

Canada’s journey began in 2017, but progress has lagged. The 2024 federal budget introduced the Consumer-Driven Banking Act, and the Financial Consumer Agency of Canada (FCAC) has been tasked with oversight. However, several core elements remain unsettled – technical standards, accreditation processes, and liability rules, among them.

Some have raised legitimate concerns that building all these components could delay implementation further. But we must reject the false choice between acting quickly and acting carefully. A smart implementation strategy can – and should – do both.

Canada can accelerate progress by adopting proven international standards where available, starting with Application Programming Interfaces (APIs). The UK’s Open Banking Implementation Entity has already developed detailed API specifications, which have been refined through years of use. Likewise, the EU’s Revised Payment Services Directive (PSD2) has led to stable, widely adopted technical protocols. Rather than reinventing the wheel, Canada can adopt or adapt these frameworks immediately – allowing fintech’s and financial institutions to begin integration while other elements of the system continue to take shape.

Meanwhile, it is equally essential to lay down the policy and governance foundations to promote long-term integrity and trust in the system. This includes:

1. Accreditation and Security:
   A robust framework must include clear, transparent criteria for accrediting third-party providers, ideally using a tiered model such as Australia’s. This ensures that data sensitivity and risk levels are matched with appropriate safeguards. Accreditation should include mandatory end-to-end encryption, multi-factor authentication, and independent audits – with a public registry maintained by the FCAC.
2. Liability and Consumer Protection:
   Canada should draw on UK experience to establish a consumer-first liability model. This would place financial responsibility on the party at fault and require automatic reimbursement of unauthorized losses pending investigation. Binding timelines for dispute resolution and access to a dedicated ombudsman for open banking complaints would further build consumer confidence.
3. Governance and Accountability:
   Strong, independent oversight is indispensable. The FCAC’s mandate must include enforcement powers, transparent performance metrics, and escalating penalties for non-compliance. A phased rollout – with statutory deadlines and quarterly progress reporting – would enhance accountability and keep implementation on track.
4. Broad Stakeholder Participation:
   A technical standards committee composed of fintech’s, consumer groups, financial institutions, and independent experts should be formed immediately. All API specifications should be made public for consultation before adoption to promote transparency and confidence.

Open banking is no longer a novel experiment; it is modern financial infrastructure. And for the roughly 35 percent of Canadians who are “credit invisible” – including young adults, newcomers, and many low-income households – access to alternative data could mean access to mainstream financial services for the first time.

The fintech sector stands to benefit too. Open banking would lower barriers to entry, attract investment, and spur innovation – conditions that Canada urgently needs to cultivate if it hopes to remain globally competitive in financial services.

The question is not whether Canada will implement open banking, but whether we will do so in a timely and effective way. We must move with urgency where international precedents allow us to do so and with care where consumer protection requires thoughtful design. The finish line is within reach – but only if we stop debating and start building.

Harvey Naglie has spent 40 years in financial services, working in both the public and private sector. Most recently, he served as a Senior Policy Advisor with the Ontario Ministry of Finance.