Open banking will lead to a much-needed level of healthy competition that would foster technological and product innovations in Canada’s highly concentrated financial services industry, according to proponents of the concept.
PwC Canada’s Canadian Banks 2019: Open banking is coming analysis released last month indicated that Canadians are increasingly preferring a banking and borrowing environment that would grant them greater control and security over their financial data.
“Customer expectations are evolving rapidly and they are looking for a one-stop-shop where they can find all their financial information,” PwC Canada national banking and capital markets leader Diane Kazarian said.
Lenders and other financial institutions will benefit from the open banking revolution as well, since they would be able to ensure greater operational efficiency and security.
“Banks could be among the biggest winners of open banking if they seize the opportunities it brings to create a better customer experience,” Kazarian added. “It also has the potential to reduce risks, such as fraud and money laundering, as sharing data between institutions will make it easier to spot anomalies.”
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The Department of Finance Canada has stated that as of last week, it has received more than 95 entries in its request for submissions to the federal-level consultation on the open banking framework.
Among those who submitted was independent lender Equitable Bank, which argued that open banking would encourage Canadians to shop around instead of settling for the most accessible option at the moment.
This is because the “competitive intensity” would force banks to start providing the greatest value for the financial products that their customers are willing to spend on.
“We don’t really think that that’s necessarily provided by one institution,” Equitable president and CEO Andrew Moor said in a recent interview with the Financial Post. “And open banking makes all of that much easier.”