A revolution will soon start in Europe with the application of the PSD2 directive on January 13. It will be mandatory for all banks operating in the European Union to open up their customer data to third party firms (when customers give consent).
EU regulators have high hopes that such will give “non-banks” the chance to compete with incumbents in the payments sector and give consumers more choice when it comes to financial products and services. The Competition and Markets Authority (CMA) in the UK is mirroring PSD2 with similar legislation.
Imagine accessing your personal banking data from a given financial institution with the third party app of your choice, but also analyzing such and being able to process transactions however you please. That’s a very tempting proposition.
Can we expect similar legislation in Canada?
Currently, there aren’t any “open banking” legislation in Canada. However, do not despair.
Back in November 2016, the Ontario Securities Commission (OSC) released a paper based on learnings from its RegHackTO hackathon. The document was favourable to the implementation of open data processes in the Canadian banking environment. OSC Chair and CEO, Maureen Jensen made the following remarks:
“I am humbled that so many very talented coders gave up their weekend and several fintech firms shared their API and resources to help the OSC solve key regulatory issues.”
Payments Canada (formerly the CPA, Canadian Payments Association) organized an event on May 2017. It was entitled “API Economy: Lessons learned from PSD2 and opportunities for Canada”. The official announcement stated:
“This presentation discusses how Canadian FIs can learn from the PSD2 experience and deliver unique experiences by using APIs to unlock the value of existing assets, historical information and business processes to harness customer context found in social media, mobile applications and the Internet of Things (IoT).”
So, it seems regulators and actors in the financial sphere are creating awareness around open banking legislation and warming up to the idea. Of course without any proper legal directive, financial institutions are not obligated to open their data; hence it becomes a matter of convincing which is never a guarantee.
Companies at the forefront of Canadian open banking
If you are curious about entities that support the Canadian open banking movement, feel free to check out the following:
- Wealthica (which I represent as a brand ambassador): a Montreal-based startup which offers a platform where you can see all your investments in one place (including financial institutions, online brokerages, robo-advisors and portfolio advisers).
- Payment Rails: another Montreal startup offering a newly launched global payout API and platform that “allows businesses to effortlessly send payments around the world”.
So to answer the title: “As long as there is life, there is hope.”
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Disclaimer: Wealthica Financial Technology Inc. has contributed financially towards this article.