In May 2019, Navdeep Bains, Canada’s federal Minister of Innovation, Science and Economic Development, announced a Digital Charter which enumerates 10 principles for modernizing the rules guiding digital technology in the country.
There are two principles in it that are quite relevant towards the adoption of Open Banking. The third states “Canadians will have control over what data they are sharing” and the sixth mentions the government “will ensure fair competition in the online marketplace.” This new governance could encourage innovation and competition; and pioneering Open Banking players such as Wealthica could play an important role in shaping up this new direction, possibly getting more leeway in the process.
Steve Boms, the executive director of the Financial Data and Technology Association of North America and president of Allon Advocacy, a Washington-based public policy firm, thinks the two previously cited directives can be a true game changer for actors navigating the Canadian financial services landscape:
“While these principles sound straightforward, in practice they would be a game changer. That’s because in Canada today, banks control consumers’ information. They decide when – and if – they will share consumers’ data with competing providers. Even if a consumer gives his or her express consent to allow the bank to release information to another party, a Canadian bank is today within their rights to choose not to do so. In fact, they are choosing not to do so every day.
At least three of the Big Six financial institutions – Canadian Imperial Bank of Commerce, Bank of Montreal and Bank of Nova Scotia – regularly override their customers’ request to have their data shared with other providers. And since the largest six banks in Canada control 96 per cent of the market, this obstruction regularly keeps millions of Canadians from accessing new and innovative financial products that could, for example, help them better manage their money, save for retirement or get a better interest rate when buying a home. This practice doesn’t just undermine the principles of the Digital Charter – it directly harms consumers. Concerns over this serious lack of competition prompted the Competition Bureau to conduct a market study in 2016 and is why the government launched consultation on the merits of Open Banking.”
Simon Boulet, Wealthica’s CEO, offers another angle on the situation:
“Some financial institutions are rather closed when it comes to allowing their clients to access their data through 3rd party apps. The other side of the coin, other industry players such as Questrade and Wealthsimple are more open and provide secure APIs for customers to access their own data.”
Of course, the charter is nascent and could evolve over time.
If you’d like to learn more about Canada’s Digital Charter, here are its 10 principles:
1. Universal Access:
All Canadians will have equal opportunity to participate in the digital world and the necessary tools to do so, including access, connectivity, literacy and skills.
2. Safety and Security:
Canadians will be able to rely on the integrity, authenticity and security of the services they use and should feel safe online.
3. Control and Consent:
Canadians will have control over what data they are sharing, who is using their personal data and for what purposes, and know that their privacy is protected.
4. Transparency, Portability and Interoperability:
Canadians will have clear and manageable access to their personal data and should be free to share or transfer it without undue burden.
5. Open and Modern Digital Government:
Canadians will be able to access modern digital services from the Government of Canada, which are secure and simple to use.
6. A Level Playing Field:
The Government of Canada will ensure fair competition in the online marketplace to facilitate the growth of Canadian businesses and affirm Canada’s leadership on digital and data innovation, while protecting Canadian consumers from market abuses.
7. Data and Digital for Good:
The Government of Canada will ensure the ethical use of data to create value, promote openness and improve the lives of people—at home and around the world.
8. Strong Democracy:
The Government of Canada will defend freedom of expression and protect against online threats and disinformation designed to undermine the integrity of elections and democratic institutions.
9. Free from Hate and Violent Extremism:
Canadians can expect that digital platforms will not foster or disseminate hate, violent extremism or criminal content.
10. Strong Enforcement and Real Accountability:
There will be clear, meaningful penalties for violations of the laws and regulations that support these principles.