Ottawa – Canadians have little control over their personal financial data and many use third-party banking apps that place them at greater risk of identity theft and fraud.
The federal government must give Canadians the means to share their financial data safely and securely by facilitating what’s called open banking, the Senate Committee on Banking, Trade and Commerce said in a report released Wednesday.
The report describes the phenomenon of open banking and makes recommendations to the federal government regarding how to bring about reforms that are in the interest of Canadian consumers and financial service providers.
Open banking — a concept that one witness suggested would be more accurately called “consumer-directed banking” — has two elements: providing consumers with the ability to direct banks to share selected financial data with other businesses, and to provide additional ways for customers to make payments from their bank accounts.
The rapid adoption of new banking technology underscores the urgency of acting on the committee’s recommendations.
Almost 4 million Canadians have financial services apps that use “screen scraping” to access their banking information. The user generally provides the app with banking login credentials, which the app then uses to extract customer data. While this is convenient, customers have no control over the scope or duration of the app’s access to their data and they have no control over how that data is used. Providing login credentials to a third party may also violate the terms and conditions of the customer’s account with their financial institution.
Alternatives exist that provide these services to consumers while mitigating risk. The federal government has a responsibility to protect Canadians’ privacy. To accomplish this objective, some committee recommendations have been crafted so that they do not require legislation to implement them. They are achievable now. And they are urgently needed. Canadians’ most intimate financial information is at risk.
Quick Facts
- Actions that the federal government can and should take now include:
- Designating the Financial Consumer Agency of Canada as the interim oversight body for screen scraping and open banking activities with a mandate to conduct research and public education, and to respond to complaints.
- Providing immediate funding to consumer protection groups to help them conduct and publicize research on the benefits and risks of screen scraping and open banking activities.
- Actions that the federal government should pursue over the longer term include:
- Facilitating the development of an open banking framework, in collaboration with industry stakeholders.
- Modernizing the Personal Information Protection and Electronic Documents Act to align it with global privacy standards. The changes must include a consumer right to direct that their personal financial information be shared with another organization.
Quotes
“Canadians are eager to embrace technology that makes their lives easier. Open banking is no exception. The federal government has a responsibility to create an environment in which the use of this technology is truly in consumers’ interests.”
- Senator Doug Black, QC, Chair of the committee
“Our banking information reveals a lot about ourselves. It is a trove of personal data. Canadians deserve to have control over who has access to that information. Our report clearly shows what the government must do to keep Canadians’ personal information safe.”
- Senator Carolyn Stewart Olsen, Deputy Chair of the committee
Associated Links
- Read the report: Open Banking: What it Means for You.
- Follow the committee on social media using the hashtag #BANC.
- Sign up for the Senate eNewsletter.
For more information:
Sonia Noreau
Public Relations Officer | Senate of Canada
613-614-1180 | sonia.noreau@sen.parl.gc.ca