OTTAWA — Conservatives plan to move quickly to get open banking across the finish line if they form government after the next federal election, as part of a broader plan to bolster competition in Canada’s banking sector by empowering financial technology startups.

Doing so, however, may require them to tweak legislation already drafted by the Liberals, says the Tory critic focused on the file, which could cause further delays. 

Conservative competition critic Ryan Williams wants to change the accreditation process for fintechs to ensure it doesn’t inadvertently protect Canada’s banking oligopoly, rather than busting it up.

Under the Liberal plan, companies would apply to the Financial Consumer Agency of Canada (FCAC) for access to financial data at customers’ requests. They could then use that information to provide financial services to the customers through apps or software. Initially, though, every company would be subject to the same process regardless of size, a one-size-fits-all approach industry groups warn could benefit large industry incumbents over newcomers, who would be swamped by costly compliance obligations. 

The Conservatives share that concern, said Williams, who is the MP for Bay of Quinte in Ontario. 

“We need to relook at that,” he told The Logic. “We have to make sure that there’s a process that benefits all players, not just the big banks, not the lobbyists themselves. We have to make sure that fintechs, financial tech companies, are the ones benefiting just as much because that’s real competition.”

Allowing more startups into the data pipeline is key to the Conservative plan to dismantle banking monopolies in Canada, the party’s innovation critic Rick Perkins told The Logic in an interview in January. “The competition in the banking industry is going to come from technology, it’s going to come from fintechs, and it’s going to be huge. It’s going to be very big under us,” he said. “Fintechs are going to get a big runway with us in government, to provide competition and financial services.”

Fintechs have been frustrated for years by a lack of progress on federal promises to institute open banking, which the government calls “consumer-driven banking.” They got welcome news in December when the Liberals announced in the fall economic statement a plan to launch open banking in 2026. It included new legislation that would’ve put the final pieces of the necessary framework in place, including accreditation. 

Then, just weeks later, Prime Minister Justin Trudeau prorogued Parliament, and opposition parties have threatened to trigger an election at the next opportunity. Those political developments have translated to months more in delays. 

Even so, the Conservatives’ enthusiasm for open banking has stirred optimism among fintechs, some of whom see the party as a motivated potential partner. While the polls have grown tighter in recent weeks, the Tories are still heavily favoured to win the coming election.

The Conservatives signalled support to move open banking forward in 2023, when Williams brought forth a private member’s bill that would have forced the Liberals to table their own plan. Williams’s bill did not make it through the House of Commons, but the gesture inspired hope, said Alex Vronces, executive director of Fintechs Canada.

“I think we’re encouraged by the prospect of a new government coming in and doing this the right way. We want the government to knock down barriers to competition in banking. The current system feels rigged,” said Vronces said. “We’ve been paying attention to what the Conservatives have been saying, and this sounds like the thing that they’re in politics to solve.”

Andrew Graham, CEO of the Toronto-based fintech Borrowell, said he’s pitched the Tories (as well as the governing Liberals) on graduated, risk-based regulation, so small startups that want to create, say, budgeting software aren’t held to the same accreditation requirements as established banks.

“That company doesn’t necessarily need the same controls or oversight as a much bigger organization with many, many more users, touching even more sensitive information,” he said. 

The flip side of that approach, said Vronces, is that it will take FCAC time to develop and implement a risk-based approach. He supports giving open banking a running start and finessing the criteria over time to avoid further delay.

Asked whether revising the accreditation process would slow down the launch of open banking, Williams quipped that it can’t go much slower than it already has. “I think we will hopefully have legislation, when elected, pretty quickly to get this in place,” he said. 

The country’s largest banks have been wary in the past of open banking, suggesting to federal policymakers it could pose risks to Canada’s financial stability.  They now acknowledge potential benefits of innovation and competition in the sector, and the Canadian Bankers Association (CBA), which represents banks big and small across the country, says it supports the current government’s approach. The framework will “allow parties to address any unforeseen issues in the initial phase,” and improve the chances of a successful scale-up over time, CBA spokesperson Nathalie Bergeron said in an emailed statement. 

The CBA’s approval is measured, though. Its website still says there are risks for consumers, adding that the banking industry is working with the government to make sure the new framework will guard against those dangers.

The Liberals first pitched open banking in their 2019 election platform. At the time, the government laid out a new regulatory framework guided by a digital charter of rights and overseen by a dedicated commissioner. Innovation Minister François-Philippe Champagne tabled an omnibus bill in 2022, C-27, that contained elements of that plan, as well as a host of other legislative changes including an Artificial Intelligence and Data Act. That bill was stalled for years and officially died when Trudeau prorogued Parliament earlier this month. 

Some open-banking advocates thought they could see the finish line in 2021, when an advisory committee proposed a regulatory framework to let consumers move their financial information freely between institutions, and suggested it be operational by 2023. Progress was slower than the advisory panel expected, as the government decided to do more consultation. 

“Open banking seems to always be two years away, and it’s been two years away for many years, unfortunately,” said Graham. 

Daniel Eberhard, CEO of the Toronto-based fintech Koho, said he shares the optimism about the Conservatives’ outlook, but he isn’t holding his breath for open banking to become a reality. 

“It would be very foolish to bet the material part of the business on legislation that you hope lands, based on this track record,”said Eberhard. “If it lands, great. We will be supportive, whether we benefit from it or not. We think it’s good for Canadians. Until it does, we spend no time thinking about it.”