Good Progress for Open Banking in Canada

The Canadian federal government named the Open Banking Lead, Abraham Tachjian. He will lead the implementation of the open banking framework. The intent is that this will help ensure that rules and controls are appropriate to keep the industry and Canadians safe, while creating an environment that fosters innovation. The second announcement I was even more pleased to hear. The EU took a major step in the wording of the Digital Markets Act that limits what Big Tech can do. It doesn’t refer specifically to open banking. It talks to the effectiveness of marketing to consumers, based off of their browsing and digital shopping patterns. Something that has become known in industry as predatory marketing, because of how effective it is. Open Banking data is a business accelerator for Big Tech. The financial data will show when someone has received a large sum of money (payday, inheritance, GIC matures, etc.), when they are most likely to purchase and their preferred payment method. The marketing ad can now be timed for when the consumer would be the most impulsive and made very attractive for payment method. The purchase will then have vastly reduced friction when combined with a Digital ID to connect all of the platforms (another related announcement this week: SecureKey acquired by Avast). If we aren’t very careful, open banking will lead to the number of Canadian’s that live paycheck to paycheck to increase significantly, not decrease. The EU Digital Markets Act is a good path and we need something similar in Canada, as opposed to the incomplete Bill C-11 (Digital Charter Implementation Act) that was meant to help mature privacy. That Act left the use of a significant portion of personal data unprotected. Some will argue that consent to share data will be in the framework, but in my opinion that has been ineffective. Organizations and their mobile apps are very good at having consumers enable data sharing – usually through the benefits of convenience. In summary, I’m eager to see the innovation that will come from open banking, like the ability for my sons to build credit through rent payments not just credit products. I also look forward to the ability to easily shop around through a mobile app when renewing a GIC and the ability to plan my retirement with an app that connects to all my financial institutions, investments and pensions. Yes, open banking will be great, as long as it doesn’t feed the larger societal issues. I’m very concerned that the use of open banking data will be left unregulated when open banking becomes mandated.