Consumer-driven banking: a massive change for banking in Canada 🏦
As you may have heard, the Government of Canada’s 2023 Fall Economic Statement unveiled plans to pass legislation around consumer-driven banking and implement the necessary framework by 2025.
But what does “consumer-driven banking” mean, and how would these changes impact you and the future of banking in Canada?
Let’s explore the transformative potential of this shift and examine how consumer-driven banking could lead to more innovative, inclusive, and customer-focused financial services in Canada.
Here’s why we’re excited about open banking, and why you should be, too.
What’s consumer-driven banking?
Consumer-driven banking, also known as “open banking,” refers to banks and other financial institutions making their data available for regulated financial technology companies (“fintechs”) like Shakepay to access, use, and share.
In other words, open banking puts you, the consumer, at the center of your financial ecosystem, giving you more control over your financial data across different platforms.
It allows you to easily and securely share your financial information with products and services you use as part of your financial life – think budgeting tools, investment platforms, crypto apps, etc.
A new era for banking in Canada
While open banking has already been implemented in Europe and elsewhere, it continues to be out of reach for Canadian consumers (for now!).
At the moment, traditional banks in Canada control your financial data and won’t share it with fintech companies. As a result, the only way for you to share your financial data with a fintech is by providing your banking login details. This practice is known as “screen scraping” and carries inherent security risks.
And if the security of your account becomes compromised through screen scraping, the liability falls on you, not the banks.
That’s where consumer-driven banking comes in: When it’s finally implemented in Canada (fingers crossed for 2025 🤞), you’ll finally be in control of your own financial data. This means you won’t need to give fintechs your banking login details anymore, or use your bank as an intermediary.
What open banking means for Shakepay (and you)
For Shakepay, the arrival of consumer-driven banking means that switching between financial service providers will be not only easier, but also more seamless and secure for anyone using our platform. Simply put, we expect open banking to be a game changer for fintechs across the country, including us.
Another cool benefit of open banking is that it’ll inevitably lead to more innovation. Products and services that seem almost impossible to imagine now could become essential parts of our financial lives in the future. Picture:
- More personalized financial products and services
- Easier and cheaper access to credit, including for students and newcomers
- Real-time payments and money transfers
- A super app allowing you to manage multiple financial products offered by different companies, all from one interface
- Better rewards across your entire financial journey
And that’s just the beginning! Who knows what kind of new products or services fintechs could create using this powerful new framework?
Beyond innovation, consumer-driven banking will also increase competition among financial service providers. With more options available and fintechs challenging the dominance of the big banks, fintech services will get cheaper, and we expect bank fees to take a dip, too. 📉
Towards a more open system
We’re thankful to the federal government for moving forward with consumer-driven banking and can’t wait to start incorporating these capabilities into our platform. We’re all in! 🎉
Seeing as the government is set to implement the necessary governance framework by next year, we expect 2025 to be an exciting time for us, our consumers, and the financial services industry in Canada.