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Insights Leadership

Unlocking Business Value for Open Banking in Canada

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Symcor April 11, 2024
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By Saba Shariff, Senior Vice President, Chief Strategy, Product & Innovation Officer
Karnan Ariaratnam, VP Digital Payments & Open Banking
Jason Dodokin, Senior Director, Product | Open Banking 

In Canada, there is an increased focus on governmental direction due in part to the federal government’s 2023 Fall Economic Statement and provincial regulations around data portability. All eyes are pinned on what’s next for consumer-driven banking within the upcoming budget announcement on April 16, 2024. 

Partnerships between financial sector participants have been growing steadily in the last year as the financial ecosystem realizes that collaboration is key and that they need to work quickly to prepare for an interconnected future.

South of the border, market driven forces have positively resulted in over 85% of data exchange volume being transferred via secure APIs. These efforts are expected to be further bolstered by recent policy announcements and regulatory efforts from the Consumer Financial Protection Bureau. 

As Canada navigates this unchartered territory, financial institutions and other industry participants must sprint, not stroll to prepare themselves for Open Banking, so they aren’t left behind. 

Organizations hold varying degrees of risk when sharing data 

Organizations strategically share and consume data to unleash business potential—enhancing customer value, driving revenue growth, fostering deeper relationships, and maximizing  efficiency. Organizations can actively choose varying approaches to data sharing, each with distinct risks:

 

Data Sharing Approaches

Risks

Screen Scraping Practices (credentials, consent)

Companies commonly implement this practice without requiring cooperation from financial service providers. 

There are significant risks associated with this practice:

  • Security/Privacy Concerns: 
    Consent to share data is critical and permission must be tied to specific data.
  • Sharing login credentials grants full access to bank accounts, including potential to enable money movement.
  • Data Quality and Reliability: Connections break when websites/interfaces change layout or functionality. 
  • Performance Issues: Takes longer to extract data than API access.

Share Downloaded Files 

This approach is commonly used for sharing CSV or Excel files and customers have control over what they share.

The challenges with this approach are:

  • Security: Email is not the most secure method for sensitive information. 
  • Complexity: Manual effort to download and consolidate data per account results in non-standardized data and manual management.

Open APIs

Open APIs enable seamless data sharing between financial institutions and third-party providers, creating innovative services and personalized experiences for customers in accordance with regulatory requirements.

Associated risks include:

  • Market Evolution: The market is evolving at different rates resulting in coverage gaps and data quality issues.
  • Cost: Investment needed to set up connections with every financial institution and service provider. 

 

Compared to screen scraping practices (credentials, consent) and shared downloaded files, APIs will offer the most effective route for organizations to prepare for Open Banking. 

“This is a critical time for Canadian banks and the financial sector. They must proactively prepare for Open Banking, even in the absence of a comprehensive framework,” says Robin Sooklal, Vice President of Privacy and Data Governance, Symcor. 

“The primary pain point for larger financial institutions is the preparation for compliance and associated costs for the pending changes to come within the industry. This, coupled with the absence of clarity of regulations, guidelines and standards, financial institutions may struggle to interpret their obligations regarding data sharing, privacy, security and consent. This ambiguity can lead to challenges in implementing compliant Open Banking practices and may increase the risk of regulatory penalties, customer dissatisfaction or stymied innovation. This is where Symcor’s COR.CONNECT provides a purpose-built solution, that has been developed with privacy-by-design as a principle. COR.CONNECT can facilitate organizations with an ‘off the shelf’ solution to fast-track compliance with Open Banking while minimizing risk and the effort required to implement a compliant program. Moreover, the solution is adaptable to meet ever changing regulatory requirements within Canada or abroad,” says Robin. 

Intermediaries will play a pivotal role in Open Banking

Partnerships with intermediaries will play a crucial role in consumer-driven banking in Canada by providing a trusted connection between financial institutions and fintechs. Intermediaries can facilitate secure data sharing, ensuring that sensitive information remains protected. By leveraging their expertise, financial institutions can confidently participate in Open Banking without compromising privacy. 

How can organizations get started knowing the benefits, complexity and cost?

Collaborating with intermediaries will allow financial institutions to avoid the expense of developing their own Open Banking platform. This cost-saving approach will be more efficient than building an independent system.

Intermediaries can also manage network standardization, ensuring consistency and stability across the ecosystem. This will minimize outages and enhance overall reliability.

By partnering with intermediaries, financial institutions can offload day-to-day operational tasks, allowing them to focus on core functions and strategic initiatives.

It’s time to unlock the potential of Open Banking

For over 25 years, Symcor has been enabling secure data exchanges for Canadian businesses with industry-wide, scalable solutions. Our COR.CONNECT platform accelerates Open Banking readiness through streamlined access to a trusted network of data recipients and data providers.

In addition, COR.CONNECT also provides: 

  • A robust sandbox: Test across multiple third parties using real-world data with confidence in low-risk production environments.
  • Personalized onboarding: Get to market faster with our tailored integration services.

As Canada finally moves towards Open Banking, it need not be a high stakes gamble. To succeed, financial institutions must proactively navigate the evolving landscape, collaborate with intermediaries, and prepare for a data-driven ecosystem. 

While the path to consumer-driven banking may be uncertain for now, the destination brings exciting promise: greater financial inclusivity; innovation; empowerment through control of financial data for every Canadian; and the potential to ease the economic anxiety plaguing so many Canadians.