Open Banking Swings Both Ways For big Banks On Risks And Opportunities: Experts

As Canada slowly but surely progresses on implementing open banking, what was initially perceived as a risk to the big banks could also present an opportunity for them, experts say.

Open banking, sometimes known as consumer-driven banking, allows individuals and businesses to securely share their financial data across lenders.

Mark Schofield, a managing director and senior partner at Boston Consulting Group, said many Canadians have relationships with multiple financial institutions — for example, they bank with one company, invest at another and have an insurance policy elsewhere.

“In the most simple sense, open banking is the ability to securely share your financial data from multiple institutions so you can build a full picture of your own individual balance sheet, your own savings, investments, and ultimately see your financial situation (and) financial health,” Schofield said.

In essence, it could allow Canadians with multiple accounts across different financial firms to see their entire financial picture on one convenient dashboard. It aims to drive competition in the sector by making it easier to switch lenders.

But the big bank incumbents appear to be well positioned to navigate the coming changes.

“I don’t view this as a looming tidal wave. It’s something that could slowly erode market share, but it’s not going to be immediate … I’m not overly concerned about this, nor are we hearing broad concerns from investors,” John Aiken, an analyst at Jefferies, said of the big banks.

After years of study, Ottawa got the ball rolling on open banking with legislation to implement it in the 2024 federal budget.

In June, the Department of Finance published proposed regulations for open banking and held a 60-day comment period that ended in August.

The department estimates that implementing the proposed regulations would cost about $457.7 million over a 10-year period and is projected to generate $13.2 billion in benefits to consumers and businesses over that time-frame.

In the absence of a secure open banking framework, the department said about nine million Canadians currently share financial data through a practice called screen scraping, which exposes them to security and privacy risks. Screen scraping usually involves an individual sharing banking credentials with a third party to access the information an app needs to run.

Aiken said the sense he is getting from the big banks is that they are trying to adapt to the new requirements but it seems “none of them are fully up to speed, even on stage one, and nothing will happen until the Big Six are up and running.”

He said the cost of implementing open banking is already a headwind for the group, and there is a risk it will become “very disruptive,” albeit over a longer period of time.

“The largest deposit holders immediately are probably not going to see that much disruption, but over time — 10, 15 years — we could see more significant erosion in terms of market share,” Aiken said.

However, Aiken said the banks could also benefit in certain ways.

For example, he said banks would be able to get access to information like customer investments held at other financial institutions. The banks could then try to convince those customers to bring their external investments in-house.

“The Canadian banks have far more data within their system that they are utilizing, I would argue quite well, (and) with extra information that’ll be helpful,” Aiken said.

“However, what open banking does is also provide that information to other players, and that is the perceived threat on the fintechs or the digital startups.”

Henry Kim, a professor at York University’s Schulich School of Business, said that Canada’s banking system effectively being an oligopoly could help the large lenders adjust.

“With such a high concentration, the banks could sit back and say ‘Well here’s a fintech that’s been doing well and buy them out or replicate that.’ They have significant power already,” Kim said.

As of the fourth quarter of 2025, Statistics Canada figures showed the Big Six banks held a more than 90 per cent share of all banking assets.

Overall, Kim is optimistic that open banking will drive positive changes in the industry.

“Down the road when the dust settles and the ecosystem figures out how all these technologies work, I believe there will be an opportunity for consumers to actually have options and have choice,” he said.

In an interview after the 2026 Global Open Finance Summit last month, Steve Boms, executive director of the Financial Data and Technology Association, said the earliest consumers could get access to open banking tools would be toward the end of 2027.

The summit featured talks from Bank of Canada and Finance Department officials on the implementation of an open banking framework. It also included discussions on how major financial institutions are viewing the situation.

In markets where open banking is further along than Canada, Boms said financial institutions were defensive at first, but that changed.

“Over time, it became more of an offensive posture and by that I mean being able to interact with customer permission data in ways that delight customers, that provide them more options, more tools that can expand creditworthiness and access to affordable credit,” he said.

He said that lenders with the most resources to spend on tech development and marketing could stand to benefit from consumer-driven banking changes.

“The banks aren’t just going to be the data providers; they’re also going to be the recipients because the third party also has to share data with the customer’s consent. So I actually think there’s a lot to like from the Canadian banks’ perspective,” Boms said.

Ethan Teclu, a spokesperson for the Canadian Bankers Association, said in a statement that it is committed to fostering innovation and competition in Canada’s financial sector in a responsible way.

“As the voice of banks in Canada, the CBA has advocated and collaborated with our members and the government to provide guidance on creating a consumer-driven banking framework that serves Canadians while ensuring the stability of our financial system,” the statement reads.

“As Canada moves towards implementation, we can apply learnings from other jurisdictions, such as the benefits of a phased approach, regulatory efficiency, and moving towards more secure, interoperable ways to share financial data.”