Canada at risk of falling behind in open banking innovation: Senate report

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Bank of Canada Governor Stephen Poloz and Carolyn Wilkins, Senior Deputy Governor, walk to the National Press Gallery in Ottawa on October 25, 2017. The Bank of Canada???s deputy governor says more diverse perspectives are needed at the decision making table when crafting policy to avoid falling into the "echo chamber." Carolyn Wilkins says this may not seem relevant for a central bank at first, but its projects in the modern economy such as cryptocurrency assets require more diversity of thought. THE CANADIAN PRESS/Sean Kilpatrick

A Senate committee has recommended that Ottawa push forward with a framework to facilitate open banking, a concept that would allow third-parties like financial technology startups access to banking data to develop innovative services.

The Standing Senate Committee in Banking, Trade and Commerce said in its newly-released report that Canada runs the risk of falling behind other countries if it doesn’t push forward, but made several recommendations on how Ottawa should proceed.

It recommended that the federal government should enact changes to privacy laws to modernize it and to prioritize consumer protection, including giving consumers data portability rights.

The committee’s other recommendations included creating a registry of accredited third-party providers and create an “innovation sandbox” to allow them to safely test and develop open banking technology.

The Department of Finance in January officially launched its consultation on open banking, which has already been implemented in other jurisdictions such as the U.K.

The Canadian Bankers Association has said it supports innovation in the financial services sector but risks, such as to privacy, must be mitigated.