As depicted in the Chart below, open banking is a framework where consumers and businesses can authorize third-party financial service providers to access their financial transaction data, using secure online channels. The benefit to consumers and businesses is that it allows them to access new products and services that enable them to better manage their financial affairs. In jurisdictions that have adopted open banking systems, participating service providers must meet standards with respect to privacy, security, and operational stability. Additionally, consumers and small businesses can opt-in and opt-out at any time and a clear system exists to manage inquiries and address complaints. In many respects, a benefit of an open banking framework is its potential to increase individual control over personal financial information.
Open banking holds the potential to reduce costs, improve Canadians’ ability to manage financial services, and gain access to the wider range of services that the digital economy has to offer. In order to deliver on these potential benefits, any system must have appropriate consumer protection, while also supporting the continued resilience and stability of the financial sector.