The Globe and Mail offered an opinion piece explaining Why Canadians Should Care About Open Banking.
The article puts forward a powerful case for the equivalent regulatory catalyst for Open Banking as is being enjoyed in Europe.
It makes the point consumers would benefit from the same improved services through data sharing, and also critically highlights the boost for the nations FinTech innovation ecosystem.
Canada has long had an innovation and productivity challenge, and the author observes that without Open Banking regulatory impetus, banks will remain closed and consequently stifle FinTech innovation and growth.
The largest obstacle to improving Canada’s economic growth is the lack of support for policies that encourage and promote innovation.
MoneySense makes exactly the same points, about consumer benefits and the risk of being left behind.
Resistance is Futile
As BankingTech writes the country is Edging towards Open Banking, through the Department of Finance running a consultation on the topic and publishing a report – A Review into the Merits of Open Banking.
The Centre for International Governance Innovation asks if Canada is ready for it, citing the lack of a GPDR equivalent presenting a risk for personal data privacy safety.
However despite these concerns a powerful ecosystem is taking shape. Banks like RBC are beginning to pilot API programs to access their data, and startups are emerging.
Writing that Resistance is Futile, the Financial Post describes a similar pilot initiative from the National Bank, and Mobeewave a Montreal-based startup that facilitates contactless payments who raised $16.5m in late 2018.
PYMNTS.com writes about Flinks, a startup pioneering a platform that facilitates data sharing between banks and non-bank service providers. Canadian Mortgage Trends explores their capability in more detail.
In his review of the State of Open Banking in Canada, Phil Siarri highlights startups like Montreal-based Wealthica, who offers an API-powered investment aggregation platform that allows users to consolidate their investment accounts and portfolios in one simple interface with various reporting functionalities.
Canada’s Digital Identity Ecosystem
Furthermore Canada is actually positioned and has the potential to leap frog other nations to become a world leader in the field.
This is thanks to their deep specialism in a critical technology domain central to the Open Banking trend: Digital Identity.
For many years now Canada has been building an Identity industry ecosystem, through organizations such as DIACC, who have developed a reference model blueprint, their PCTF, for enabling this ecosystem to share login credentials to streamline access to digital services.
CIBC’s President and CEO Victor Dodig describes how this approach is the key to the future banking experience.
Much of this work has been driven by a goal of enabling integrated access to online government services, utilizing your banking credentials to single sign-on to portals for completing tax returns et al. Canadian Id specialist SecureKey has built a strong position in this space, such as their Concierge service.
In short the mechanisms to improve online government services is achieved through the same interconnect foundations as Open Banking. It’s a keystone foundation to build upon.
The perfect storm is that the concerns holding up adoption is also the opportunity.
Another Financial Post article describes the major banks as being luke warm to the trend, understandably concerned about potential security risks:
“when more parties are transmitting and storing financial-transaction data, the risk of identity theft increases too. Third parties that store log-in credentials, such as usernames and passwords, could also be more susceptible to cyber-attack if their controls are lacking.”
Self-Sovereign Blockchain Identity
Canada’s opportunity to leap frog to a world leadership role in Open Banking is to pioneer the role the Blockchain and ‘Self-Sovereign’ Digital Identity will play in enabling these ecosystems.
For example in our Starling Bank case study it identifies how they are using the OAuth 2.0 protocol to achieve the integration with their catalogue of banking app plugins. (see from 43m:10s in this video).
As Timothy Ruff CEO of Evernym describes in this blog, Self-Sovereign Identity represents a further evolution again, a third generation where OAuth represents a second.
Repeating the point about Canada’s leadership in the Identity field exemplar pioneers of this approach including British Columbia and their Orgbook use case, utilizing the technology to streamline small business administration.
In Alberta the state owned bank ATB Financial is building ‘ACE’, the Alberta Credential Ecosystem, a local collaboration of organizations beginning to adopt SSI and achieve integrated services through sharing SSI credentials.
The power of ecosystems are key to an exponential future! #SUCanSummit
The Alberta Credential Ecosystem is an example of how we're embracing a future of Self Sovereign identity #SSI and #blockchain to give individuals control of their identity
— Mike Brown (@mike_brown_yyc) April 23, 2019
There is already considerable momentum in Canada to further accelerate these efforts. Digital Economy luminary Don Tapscott has launched the Blockchain Research Institute, charged with a goal of establishing Canada as a world leader in this field.
Our Summit Panel “Security and Identity: Supporting the Trust Protocol” is underway and filled with insight! Thank you to panelists Fatema Pirone, Carlos Moreira and Jennifer O’Rourke from @cibc, @WISeKey and Attest. #Blockchain #BRI2019 #security #AccelerateTheRevolution pic.twitter.com/MGenbmKCts
— Blockchain R.I. (@blockchainRI) April 23, 2019
Canada’s Open Banking Action Plan
So consider what a huge economic accelerator it would be, to pioneer the intersection of the Blockchain and Identity, and the role they will play in achieving and enhancing Open Banking innovations. Each alone is a mega trend, combined it offers a supersonic stimulus for Canada’s tech sector.
Ernst and Young believes that Open Banking can thrive in Canada, improving the competitiveness of the sector and encouraging better services for tech-savvy Canadians, through building upon and growing an existing, thriving FinTech ecosystem.
There is also a wealth of industry support to make this happen.
For example the Holt Accelerator is a prestigious startup incubator specializing in FinTech, and have laid out their own set of recommendations for achieving Open Banking innovation leadership:
“– Start the process and aim towards a co-regulation system.
– Facilitate the standards-setting process. This process will be iterative, involving multiple stakeholders and will extend over several years.
– Identify an open-banking beach-head, such as the merchant market, so that there is a swift acceptance of the new system among a targeted group.
– Encourage regulators to employ or even build technical capabilities, in order to better keep up with technological advancements.”