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Consumer-Directed Finance: The Future of Financial Services

The Department of Finance’s Advisory Committee on Open Banking (the Committee) has released its interim report.

In its consultations, the Committee posed three questions: are there meaningful benefits for Canadians, how should risks be mitigated and what is an appropriate role/course of action for government?

Key findings include:

• Stakeholders strongly agreed, the framework needs to be straightforward, seamless and convenient and designed with the consumer in mind.
• Mitigating risk and fostering innovation were viewed as equally important objectives, with consumer-directed finance driving initiatives for broader digital identity and strong in-person identification systems
• Canadian financial institutions are well positioned, including against their international peers, to take advantage of the opportunities, and consumer-directed finance presents an opportunity to strengthen that position
• Slow adoption and inaction do present risks for Canada’s financial sector from a global competitiveness standpoint

The report states, “If Canada hesitates, or becomes bogged down by the complexities of acting to enable consumer-directed finance, we stand to lose significant ground on innovation and competitiveness.”

In the report, the Committee also moves away from the Open Banking terminology towards the more broadly-defined Consumer-Driven Finance, and has now called for a white paper on a proposed consumer-directed finance framework for further consultations.