Mahima Poddar is the Group Head of Personal Banking at Equitable Bank. Andrew Graham is the co-founder and CEO of Borrowell, one of Canada’s largest fintech companies. Colin Deacon is an Independent Senator from Nova Scotia who was previously a tech entrepreneur and angel investor.
Some policy challenges are suitable for slow, sequential action, while others call for urgency. What is necessary for Canada’s transformation into a digital economy? When it comes to implementing open banking and renewing privacy law, slow sequential action would be a mistake.
It is an indisputable reality that Canada has lagged behind in establishing the legislative and regulatory building blocks of the digital economy. We urgently need to catch up with global standards in the areas of open data (e.g. privacy, banking, digital health), competition policy, payment systems and digital identity if we want to manage the risks and capitalize on the opportunities of digital identity. digital age. .
The question is not whether these changes are necessary, but whether we have the luxury of moving forward on these priorities sequentially. We believe that Canada needs to work on these priorities in parallel and at a pace closer to how the government initially responded to the threat of COVID-19. This economic threat is no less serious. the OECD predicts that Canada will be the worst-performing advanced economy, in real GDP per capita growth, over the next four decades. The slow progress on these files is already undermining the prosperity of our children and grandchildren.
Canada is home to the second largest tech cluster in North America: the Toronto-Waterloo corridor, and global technology leaders are emerging from communities across our country. But regulatory gridlock has meant we don’t get the full benefits of this enviable capability.
Let’s look specifically at open banking. Today, at least five million Canadians already use a fintech product that helps them lower their banking costs, better manage their investments or increase their credit score. These fintechs, whether publicly traded or backed by experienced investors, require strong cybersecurity practices and consumer privacy protections that go beyond Canada’s current rules. These are table bets.
The reality is that Canadians cannot fully and securely control their financial data until an open banking regulatory framework is in place. This would allow consumers and small businesses to choose what data they would like to share with a reputable financial service provider in a secure ecosystem where they can opt out of that data sharing agreement at any time. Slow regulatory changes in open banking – as recommended in a column of this document – may actually perpetuate, not reduce, potential risks.
But why are so many Canadians and small businesses already using fintechs? Simply, to manage your financial affairs in a way that makes your life easier. They can reduce their costs, increase savings and better control their spending using tools that have not been available through their bank. In other countries, where open banking is more developed, consumers can easily compare loans, consolidate finances across accounts, manage cash week-by-week to save money, and even quantify their carbon footprint. The time, expense and limited options associated with traditional banking services can create stress, especially for underserved Canadians and small businesses, as identified in a poll of Black Entrepreneurs sponsored by several senators last year.
A year ago, the Minister of Finance received the final report of its Open Banking Advisory Committee. He offered an important perspective on the interplay between privacy laws and open banking. The committee astutely noted that while the Digital Charter Implementation Law (who died in the last parliament) could inform privacy rules in an open banking framework, revisions to Canada’s privacy laws alone will not provide sufficient protections for open banking. The committee clearly and correctly stated that any third-party financial services provider will need to be accredited and meet minimum security, privacy, liability and other standards before they are allowed to offer their products or services to Canadians.
Last week, the deputy finance minister Announced that the government is now implementing the advisory committee report and the Minister for Innovation has identified updates to the privacy law as a top priority. We applaud the government for beginning to prioritize these issues and encourage them to work on these files simultaneously and in a hurry. Not only will this help ensure that our legislative and regulatory frameworks better serve Canadians, it will begin to catalyze private investment, creating opportunity, jobs and prosperity now and for future generations.
We can’t relax. We can’t settle.
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