On July 17, the Financial Data and Technology Association (FDATA) of North America released a paper on competition issues around customer-directed finance (often referred to as “Open Banking”) and the financial data access competitive landscape in Canada.
The paper’s release coincided with a virtual presentation by FDATA North America Executive Director Steve Boms, Senator Colin Deacon, as well as Michael Binetti, partner at Affleck Greene McMurtry LLP who are all very well versed on the subject at hand. It’s good to note that Wealthica is a member of FDATA North America and therefore several team members attended the presentation.
FDATA’s findings are centered around three points:
1. The growth of the Canadian fintech ecosystem
A growing number of Canadian consumers and small businesses are choosing to use fintech providers for payment and savings services, to provide access to credit, and to give them an complete view of their financial lives. Those users amount to approximately 4 million people.
One of the main principles of fintech services is the consumers’ or small businesses’ ability, and right, to access to their financial data, which is typically held at a financial institution. Wealthica is, you might have guessed, a good example of this type of offering.
2. Access to financial data is routinely thwarted
FDATA found that traditional financial institutions in Canada routinely attempt to thwart access to consumers’ financial data.
These restrictions include:
- Attempts to directly limit third parties’ access to data in spite of customer authorization.
- Deterioration of data sharing.
- Targeted blocking of sharing specific data fields.
Therefore, competition in data-driven financial services is being reduced to the detriment of consumers and small businesses.
3. Towards a customer financial data right
FDATA’s latest research provides a legal analysis of existing data-related statutes, indicating as to why data thwarting efforts are not recommended or even permissible.
Furthermore, attempts to override customer-directed data access can and should be addressed by the implementation of a customer financial data right in Canada.
“The financial impact from COVID-19 – and the government’s refusal to allow fintech lenders to participate in its response – is the latest in a growing string of examples that underscore the need for Canada to have a customer-directed finance regime as soon as possible,” stated Senator Colin Deacon.