Strong consumer protection and consumer education will be important for open banking in Canada

FCAC survey shows Canadians' knowledge and understanding of open banking is low

OTTAWA, ON, June 1, 2023 /CNW/ - Today, the Financial Consumer Agency of Canada (FCAC) published a report on the results of its public opinion research into Canadians' awareness and understanding of open banking and financial technology (fintech) services.

As part of its mandate, FCAC monitors and evaluates trends and emerging issues that affect financial consumers, such as open banking. The public opinion research report published today will help inform the approach to open banking in Canada, in particular financial consumer protection policies and consumer education. 

Open banking could shape the future of banking in Canada. Open banking is a secure way for consumers to give access to personal financial information when accessing financial services online or through mobile applications such as fintech apps. Open banking could give users access to a wide range of consumer-oriented financial products and services, increasing consumer choice and offering various benefits.

Open banking is not yet available in Canada, but many Canadians are already using fintech apps that use screen scraping to access financial data. Screen scraping is different from open banking because consumers must share their online banking username and password. Sharing this information may violate consumers' electronic access agreements with their banks and expose them to security, privacy, and liability risks.

Key findings of FCAC's open banking survey

The report's findings provide evidence that strong and consistent consumer protections and education will be essential to build trust, understanding and interest in open banking among Canadians.

Key findings:

• Canadians' knowledge and understanding of open banking, and their interest in it, is low. Just 9% have heard of open banking, and not all who have heard of open banking fully understand it.
  
  
• After hearing a definition of open banking, only 15% of respondents said they would participate in open banking, 29% said they might, and 52% said they would not.
  
  
• Only 18% of respondents knew that protections are different when using services offered by fintechs versus banks. Over 80% of Canadians either thought their protections were the same for both, or were not sure.
  
  
• More than 80% of Canadians would not keep using financial products and services if they did not trust that their information and/or money would be protected against theft, fraud, or accidental loss.

The Government of Canada is currently considering the best way to enable the safe introduction of open banking in Canada. FCAC is pleased to contribute to the Government's development of a framework for open banking and is providing advice on how to protect consumers.

FCAC has also provided recommendations to the Government's Advisory Committee on Open Banking. One of FCAC's key recommendations is that consumers should benefit from strong and consistent consumer protections and market conduct standards. These include language that is clear, simple and not misleading, no coercion, express consent, and a robust complaints-handling system. Protections should also address the privacy and security of Canadians' financial data.

To help consumers strengthen their financial literacy and make informed financial decisions, FCAC provides unbiased and fact-based information on a variety of topics, including open banking.

Quote

As Canada moves forward with introducing a framework for open banking, it is essential that the rights and interests of Canadians are protected. The findings from FCAC's survey show that Canadians value consumer protection. For Canadians to realize the benefits of open banking, strong and consistent protections will be key.

— Judith Robertson, Commissioner, Financial Consumer Agency of Canada

Quick facts

• FCAC protects financial consumers by supervising the compliance of federally regulated financial entities, such as banks, with their legislative obligations, codes of conduct and public commitments, and by strengthening Canadians' financial literacy.
• The open banking survey was conducted in May and June 2022 using a probability-based sample of 5,460 Canadians aged 18 or older. The results can be generalized to the Canadian population.
• Information on the implementation of open banking in Canada is available from the Department of Finance: Open banking implementation.

Related products

• FCAC report: Canadians' Awareness and Understanding of Open Banking
• FCAC submission to the Advisory Committee on Open Banking

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SOURCE Financial Consumer Agency of Canada

Media Relations, Financial Consumer Agency of Canada, [email protected]