MONTREAL — A long-awaited government report on the future of open banking has given fintechs hope that Canada, a laggard on open finance among its peer nations, will soon implement the system. For now, however, the industry is waiting to see exactly how the report’s recommendations will translate into action.

The Department of Finance hasn’t yet committed to the recommendations in the Aug. 4 report, which calls for the government to begin implementing an open banking regime immediately, with the goal of launching a limited version of the system in January 2023. The government’s lack of a definitive stance has left some in the industry guarded about what progress, if any, to expect in the near term.

“As a venture-backed company, we can’t change our operations in anticipation of a new framework that may or may not be adopted,” said Michael Katchen, CEO and co-founder of Wealthsimple, one of Canada’s largest fintechs. “Once there are clear rules and timelines, then we will move quickly to realize the benefits of open banking for our clients.”

Besides outlining a suggested timeline, the report made a series of concrete recommendations for how Canada should implement open banking, a system in which third parties can access banking data to build new products and services for consumers. To accelerate the process, the report said, the government should appoint an official to oversee the implementation, who would later yield oversight to an organization with members representing consumers, banks and fintechs.

The appointment of that official would be the next step in moving the recommendations forward, people in the fintech industry told The Logic. In the meantime, however, startups have been left to decide for themselves what to make of the report, with some saying it doesn’t give them much to work with in the near term.

Like Wealthsimple, Toronto-based Borrowell won’t be making product-roadmap decisions based on the report, said Andrew Graham, the company’s CEO. Now that the report is public, Graham said, both the industry and the government should commit definitively to a timeline for rolling out the system.

“Now the real work, of making decisions and setting standards, begins,” Graham said. “Until we get through that phase successfully, with an open banking framework that supports consumer choice, it’s too early to celebrate.” 

The open banking report was the culmination of a process that began in 2018, when the federal government appointed a committee of four experts to study the issue on its behalf. For this report, the government’s second on open banking, the committee based its recommendations on an extensive consultation process that took place in late 2020.

The Department of Finance declined to comment on the report’s contents or make any officials available to discuss it. In a statement at the time of the report’s release, Finance Minister Chrystia Freeland thanked the committee for its work and said she looked forward to reviewing its recommendations.

Throughout the summer, Canada’s fintech sector had been anxiously awaiting the release of the report, which was expected to provide a general policy direction that would help businesses plan ahead. While some in the industry had privately speculated that the pandemic delayed Finance’s work on the issue, documents obtained by The Logic through an access-to-information request show that the committee delivered its report to Freeland in mid-April, nearly four months before it was made public.

“We conveyed the need to move forward immediately,” Ilse Treurnicht, CEO of MaRS Discovery District and a member of the advisory committee, said in an email. “A lot of progress can be made in the next 12 to 18 months, and industry players (fintechs, incumbents and others) have a critical role to play. With further delays, Canada will fall further behind.”

Also complicating matters for fintechs is the federal election campaign kick-off last week, which could distract from progress on the issue inside the government. According to Ben Harrison, partner and head of partnerships and policy at Portage Ventures, it is all but inevitable that the election, set to take place on Sept. 20, will delay the government’s plans for open banking.

“The shorter nature of this election will technically mitigate the risk” of a longer delay, Harrison said, “but you still need the next government to prioritize it.”

Finance Canada spokesperson Anna Arneson said the government’s position on policy matters such as open banking will be determined after the new cabinet is sworn in.

At least one positive for fintech has come out of the campaign process so far: the mention of open banking on a major party platform. In its platform, released earlier this week, the Conservative Party called for new legislation on open banking, among other measures to boost the country’s fintech sector. The Liberals and NDP have yet to release their platforms.

Even by setting a January 2023 launch date for open banking, though, the committee might not have been ambitious enough in its recommendations, said Bob Fay, managing director of digital economy at the Centre for International Governance Innovation. The timeline’s focus on “years, as opposed to weeks” allotted too much time for implementing a system that has already been rolled out successfully in other countries, such as the U.K., Fay said. 

Others, such as Frédérick Lavoie, founder and president of Montreal-based Flinks, disagreed. Lavoie said the realistic timeline and the specificity of the committee’s recommendations gave Flinks confidence that the measures in the report would eventually be implemented. 

“The fact that it’s detailed removes a lot of conversation,” Lavoie said.