Canadians need more assurance and enablement in financial services

Whether it’s a payment, an account opening, or applying for a loan, Canadians want all aspects of their personal finances to run smoothly and securely. It is a reasonable instinct. Budgeting for everyday goods and services is complicated by high prices. Saving for a down payment—for those fortunate enough to consider home ownership—requires steely discipline. And planning the investments that can support a retirement involves more effort than ever. While Budget 2024 earned attention for targeting housing affordability, it also introduced a framework for financial services manageability. By laying out the rules for consumer-driven banking—a secure way to share financial data with trusted partners—Canadians will benefit from seeing their full financial picture in one place, increased competition, and new products and services. Scott Talbott is the executive vice-president of the Electronic Transactions Association. Photograph courtesy of Scott Talbott Setting the stage for consumers to integrate their financial lives is a welcome development. Canadians are generally well-banked, but many have several relationships with different banks, credit unions, and fintechs. So, it is still a challenge to manage the entirety of one’s financial life. Under consumer-driven banking, individuals will have the option to choose where and how their financial data is shared, allowing them to think about their finances holistically while giving them granular control over which offerings best fit their needs. Once Canadians can more easily link accounts or share their data, consumer-driven banking will immediately and materially improve their finances. By making rules that allow Canadians to safely share their financial data with banks and fintechs, it will allow for improvements and the creation of new products and services as banks and fintechs evolve their business models to accommodate a data-rich ecosystem. The consumer-driven banking framework will help Canadians manage their credit cards, apply for loans, and save for their futures much more easily. The top prize for consumers is that consumer-driven banking will allow financial institutions and fintechs to develop bespoke solutions for them. Per an unsurprising Deloitte report, this is of great interest to a consumer base seeking lower rates on loans, financial products based on their individual spending behaviours, and personalized tools and products that improve financial health. Consumers will also benefit from new rules that provide legal certainty and predictability to all financial transactions and data-sharing. Clear regulations and integration with existing laws will further buttress this already well-regulated sector. The regime is the foundation for a consistent customer experiences as financial services companies will be able to collaborate more easily given clear consumer protection guidelines. Further, built-in interoperability with financial systems around the world will ensure that Canadians enjoy globally competitive services. When these measures are implemented, we will also enjoy new services that allow for more useful credit scores, and more robust financial-planning products. This convenience will come at no cost. Thanks to clear consent mechanisms, individuals can choose which financial information to share and with whom. These rules will incentivize banks and fintech upstarts to collaborate, thereby enabling the competition and new products that will help Canadians to realize their financial aspirations. In a more competitive marketplace, financial services providers will naturally respond to provide improved offerings to consumers. The benefits of greater competition are already evident in the United Kingdom, which has already created its own consumer-driven banking regime. British consumers can easily personalize their budgeting and saving through apps which offer a consolidated view of their paycheques, expenses, loans, and investments. They can also automate paying bills and invoices from designated accounts on their due dates, which can reduce or eliminate late fees. British savers can also authorize funds to move automatically between accounts to optimize earned interest and benefit from comprehensive financial planning services that automatically save and invest on their behalf. This reality is close for Canadians. Ultimately, innovative financial services regulations and a modern payments infrastructure are important policy measures that reduce friction in the economy. Ottawa must not delay in providing fintechs and incumbents the forward guidance needed to create the products and services that will help Canadians navigate their finances and achieve their financial goals. Scott Talbott is the executive vice-president of the Electronic Transactions Association, the world’s leading advocacy and trade association for the payments industry. The Hill Times

Canadians need more assurance and enablement in financial services

The consumer-driven banking framework will help Canadians manage their credit cards, apply for loans, and save for their futures much more easily.

Time for a shift: Canada must treat Alzheimer’s like other progressive diseases

Canada faces a cybersecurity crisis with critical infrastructure at risk

Let Ukraine strike back

Who’s standing up to the danger of World War III?

The sad saga of Afghan-Canadian military advisers

Between wars and fears of fascism in the U.S., there’s plenty to be scared about

Canadians want more control over their data: the case for consent-centric open banking

Government should focus on cultivating competition in the financial sector

Canadians deserve more from our financial sector

Innovation sector could fall behind without Liberal follow-through on open banking, say advocates

Canada is ready for open finance and it’s time the government deliver

News

Get free news updates

Opinion

Submit a guest opinion article

resources

Advertise

subscribe

get help

Canadians need more assurance and enablement in financial services

The consumer-driven banking framework will help Canadians manage their credit cards, apply for loans, and save for their futures much more easily.

Get The Policy Briefings Newsletter