Canada To Benefit From Open Banking, Feds Could Do More To Spur Competition: Economist

A big change on the horizon for Canadian banking is being applauded by a Canadian economist.

In the most recent economic statement, the federal government promised to introduce open banking, or “consumer-driven banking,” in 2024, a piece of legislation initially promised by the liberals on the campaign trail in 2021.

Moshe Lander, a Concordia University economics professor, says it will breed competition in the world of Canadian banking.

The premise of open banking focuses on expediting the process of sharing financial data between services, allowing customers to pool all of their bank accounts, even those at different banks, into a single interface.

“The idea of open banking is that, let’s say somebody comes along and says ‘All you have to do is tell me what the various account and transit numbers are and I can put all of that information into one platform,’ so it’s easier to have everything right at your fingertips,” he told CityNews.

“But it also means then that not only all of your existing accounts will be there, but your potential accounts could be there too, so the banks could then advertise through these platforms.”

Read More: Banking changes to look out for in 2024

Lander says many other countries have adopted the concept, which he says in turn, could create the competition needed to reduce mortgage rates and alleviate the monopoly controlled by several major Canadian banks.

While he says Canadians will reap the benefits of the competition this legislation creates in time, it still doesn’t go far enough.

“The one thing they really haven’t done is throw open the doors to international banks, and so that would really force Canadian banks to concentrate on how to deliver the best services,” he said.

“If the big American giants or some of the big European banks can set up shop in Canada, think about what that would do to the Canadian banks that are not having to compete.”

The federal government said in its fall economic statement that it would introduce legislation in 2024, which the liberals initially said would come into effect no later than 2023.