How Canada’s financial services sector is navigating consumer-directed finance and the new opportunities it brings
Tracking toward the country’s January 2023 deadline for Open Banking, Canada has made another major move toward readying financial institutions for consumer data-sharing that could revolutionize the financial services sector. In the last week, the government named Abraham Tachjian, a digital-banking expert and director in the financial services practice at PwC Canada, as the country’s new open banking leader “tasked with creating an open banking system [working] together with industry, regulators and consumer representatives, including an accreditation framework,” according to American Banker.
Even with concerns over consumer privacy, the Canadian open banking model is one of the most coordinated, robust and ambitious efforts globally – meant to serve banking customers better and provide a fair playing field for banking innovation. Though it’s picking up steam, open banking in the U.S. still lags behind their neighbors to the north. “While U.S. banks have begun working to incorporate open banking concepts, the lack of nationwide standards has resulted in a patchwork of approaches that leaves the customer with no single experience,” says Bhavin Turakhia, CEO of Zeta, in a recent op-ed.
There is a lot U.S.-based FIs could learn about consumer-directed finance by watching Canadian banks and credit unions navigate open banking. Canadian credit unions, in particular, are seeing open banking as something to capitalize on. Jay-Ann Gilfoy, CEO of Meridian Credit Union Ltd, says “We’re looking at it as: ‘How can this help us grow? How can this help us do the right things for our members?‘” in her recent Financial Post interview. That sentiment is echoed by Eric Christensen, Forbes Finance Council member in a recent article on open banking prospects in the U.S. He says, “It remains imperative that banks think about open banking for what it is: an opportunity to continue enhancing and building relationships with their customers.”
In the meantime, the U.S. government is making slow but steady progress as the Consumer Financial Protection Bureau opened a public comment period in 2021 as it begins to consider rules governing an open banking framework. “But without national regulation to drive the adoption of open banking,” Christensen says, “It is up to banks to start their open banking journey.” Large banks are responding by building bench strength within their own ranks and enhancing in-house technology capabilities, while smaller and midsize financial institutions are exploring embedded banking services largely through fintech partnerships.
Stay tuned as Believe in Banking continues to provide news and insights on the industry’s latest developments, like open banking and new opportunities for financial institutions. For best practices in banking and meeting consumers at the point of need, contact the banking and credit union experts at Adrenaline at firstname.lastname@example.org.