Exciting industry news that makes 2020 a little less dark and depressing: it was recently announced that Canada’s Department of Finance has resumed special open banking consultations with industry stakeholders, after initially postponing them due to Covid-19.
Canadian Senator Colin Deacon- who represents Nova Scotia and sits as an Independent- took to Twitter earlier this month and proudly announced the good news; which is being received well by industry watchers and insiders. In his Tweet, he said he was pleased the federal government prioritized the consultations.
The consultations were first cancelled last spring when the first wave of Covid hit. They are part of a broader government review on open banking and other fintech concepts- and were initially introduced in 2018’s federal budget. The consultations were initially conducted under Finance Minister Bill Morneau but since his resignation due to involvement in the WE charity scandal, they will now be conducted by newly-minted Finance Minister Chrystia Freeland. Their purpose is to assess whether open banking would ultimately deliver positive results for Canadians. The open banking advisory committee’s mandate will be carried out in two different phases- firstly assessing the merits of open banking, and secondly, assessing open banking implementation considerations. The review entered its second phase at the end of January before Covid took effect across Canada- shutting down a vast number of government committee and consultation meetings that were in the process of unwinding.
Senator Deacon’s Tweet also included an email sent to stakeholders by Finance Canada, and he emphasized that the reopened consultations will consist of a total of five virtual sessions that will run through November and December. Accounting and business services giant Price Waterhouse Coopers will serve as the facilitator of the consultations.
The second phase of the consultations are focused on determining how regulators and the financial sector can mitigate the privacy and data security risks that are associated with open banking. The consultations will move forward involving industry stakeholders within Canada’s fintech ecosystem. They will get to have a direct input in discussing and addressing issues including potential solutions and standards to enhance data protection in the financial sector through reviewing internal governance, consumer control of personal data, privacy, and security.
2020 has been a rough year for Canada’s Fintech community; as it experienced several setbacks- mostly brought on because of Covid-19. In addition to the open banking consultations being delayed until the near end of the year; the federal government had also rejected a number of proposals for fintech companies to help distribute Covid relief funding to businesses.
A recent analysis revealed the EY Open Banking Opportunity Index (https://www.ey.com/en_gl/banking-capital-markets/how-new-open-banking-opportunities-can-thrive-in-canada) placed Canada in 8th place after other countries like China, United States, and United Kingdom. In the index, Canada trailed them specifically in terms of regulatory environment and adoption potential. During the pandemic, The US and UK plus several other countries- unlike Canada- utilized the help of Fintech firms to distribute government aid.