Consumer-Directed Finance: The Future of Financial Services

Close-up of a woman sitting with his friend in cafe holding credit card and mobile phone for shopping online

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.