TORONTO — A long-promised revolution in banking is headedto Canada, but you might not notice when it arrives.
Change is in the works that will give Canadian consumers and businesses significantly more control over their financial data, including who they share it with, in what’s known as open banking.
Open banking works by giving consumers the option to share their banking data with other firms. The most common use is granting access to budgeting or money management apps and companies, so that a customer can pool different bank accounts and credit cards into one place.One of the biggest areas of growth is in credit assessments. Under open banking, lenders could directly access an individual's banking data, so they can look beyond credit scores.
"I think gaining trust in Canada is going to be extremely hard for the fintech community; that is their Everest to climb." Competition seems to be a lower priority, he said, with a cautious approach that will see startups in the space needing accreditation.There is also the question of how much consumers bother to comparison shop, or to look into alternatives without something going wrong with their existing providers, Pigeon noted.
She said terms like open banking or consumer-driven finance don’t really help with that because they don't give any intuitive sense of what it is.Proponents say it takes time for momentum to gather and for people to understand and trust it.
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