The adoption of open banking and open finance as foundational fintech services is expected to be established by 2023. However, the level of public knowledge varies across nations, with Canada experiencing a lack of awareness.
Open banking and open finance will be established as foundational fintech services by 2023. However, some nations are developing technologies more slowly than others, which causes a lack of public knowledge. Less than 10% of Canadians, according to the Financial Consumer Agency of Canada (FCAC), had heard of open banking, proving that this is the case in Canada.
The level of open banking and open finance’s comprehension in the nation was revealed by FCAC in its report. It will especially identify the need for education on financial consumer protection policies and serve to inform the approach to open banking. The possibilities for open banking to benefit Canadian customers is enormous. When using mobile applications like fintech apps or online financial services, consumers grant access to their personal financial information.
Open banking can provide users with access to a variety of financial services and products geared toward consumers, expanding consumer choice and providing a number of advantages. However, many Canadians are using fintech apps that use screen scraping to acquire financial data even if it is not yet widely accessible in our country. Open banking and screen scraping differ greatly in terms of the security risk, though.
Security is one of the main issues surrounding open banking. Contrary to popular belief, your financial username and password will not be disclosed to other organizations. But that is with screen scraping. Sharing this information could be against the terms of customers’ electronic access agreements with their banks, putting them at risk for legal, security, and privacy issues.
“It is crucial that Canadians’ rights and interests are safeguarded as Canada moves forward with establishing a framework for open banking. The poll results from FCAC demonstrate how important consumer protection is to Canadians. Strong and reliable protections will be essential if Canadians are to benefit from open banking, according to Judith Robertson, FCAC commissioner.
More information must be given to Canadians, according to FCAC, in order to dispel common misconceptions about security and open banking. especially in light of the fact that only 9% of people have heard of open banking. Not everyone who has heard of it comprehends it completely either. Only 15% of respondents stated they would engage in open banking after learning what it was. Over half (52%) of respondents answered they would not, compared to 29% who said they may.
Only 18% of consumers were aware that fintech protections differed from those provided by banks when it came to user protection. More than 80% of respondents said they were unsure or believed their safeguards were the same for both. In the end, 81% of people worldwide agreed that they would not use a financial product if they did not trust it.
Considering the future
The FCAC is assisting in creating a framework for open banking, and the Government of Canada is now deciding how to facilitate the safe adoption of open banking in Canada. It also intends to keep offering guidance on how to protect customers.
The Government Advisory Committee on Open Banking has also gotten advice from FCAC. Consumers should benefit from robust and uniform consumer safeguards and market conduct rules, according to one of FCAC’s main recommendations. These include unambiguous agreement, no compulsion, clear, straightforward wording, and a strong complaints-handling system. The privacy and security of Canadians’ financial data should also be protected.