The federal government released its long-awaited report on open banking today, capping an extensive research and consultation process that began in 2018. After two rounds of consultations with industry stakeholders, the government’s advisory committee submitted the report in April, which includes recommendations on how to give fintechs access to customer information stored with banks—a system that is expected to enable a wide variety of third-party financial services.
Here are five key takeaways from the report.
1. The committee suggests a specific timeline for implementing the system, with particular deliverables ahead of a January 2023 launch. The first nine months should be dedicated to the design of the system, with the government establishing working groups and clearing any regulatory or legislative roadblocks. The second nine months should involve the implementation of the system and accreditation of its participants, and after that, operations should be fully underway.
2. To expedite the implementation, the report recommends a phased approach to open banking governance. The government should immediately appoint an open banking lead, accountable to the deputy minister of finance, who will work with industry stakeholders on how to advance the program, it says.
3. In the meantime, the federal government should create a dedicated governance organization. The federal appointee would eventually yield oversight over the body, which would include both industry and consumer representatives. In May, The Logic reported that the committee had proposed creating a public-purpose organization to oversee the system; the report says the committee decided on the phased approach in response to stakeholder feedback.
4. Participation in the system should be mandatory for federally regulated banks. Provincially regulated financial institutions, such as credit unions, should be allowed to join, as well as any other entities that meet the accreditation criteria, which would be determined during the first 18 months of the implementation.
5. The initial version of the system should allow third-party services to receive consumer financial data, but not edit the data on banks’ servers. That means some capabilities, like account creation or payment initiation, wouldn’t be available to third parties for the time being. Enabling those features would delay the system’s rollout, the committee said.