The future of data access in Canada

Since Plaid expanded to Canada last year, we’ve been impressed with the thriving fintech community there. Our customers–both fintechs and banks–offer many of the most popular and frequently used consumer finance products in Canada, such as Mylo, Wave, and Wealthsimple. And we’re always on the lookout for things that can help that growth.

So when the Department of Finance Canada released a consultation paper seeking thoughts on the benefits and risks of open banking, Plaid was eager to respond. With operations in North America and a large share of U.S. fintech companies exploring investment in Canada, we have a front row seat to multiple data access approaches, with insights and lessons learned to share.

You can read our full comment letter here.

We built our recommendations on several principles, which we believe are essential for developing and sustaining a successful data access framework. The system must be:

1. Rights-based: Individuals and businesses should have a clear right to their financial data and be able to access that information directly or through a third party.

2. Comprehensive: As a rule of thumb, consumers should be able to access via third party channels any information they would be able to access directly through their financial institution’s website or printed statements.

3. Consent- and permissions-based: Establishing consumer rights is an important but likely insufficient step to giving consumers and business users greater control. They also need tools to actively manage their data and should be able to determine what data elements they choose to share, with whom they share them, for what period of time, for what purpose(s), and to revoke consent.

4. Government-encouraged and industry-driven: The government has a critical role to play in establishing personal data rights and ensuring consumers can easily enjoy them. When necessary, the government must hold industry and other stakeholders accountable and take action when necessary to protect consumers’ rights. The role of the private sector should be to compete to develop the best solutions for consumers to make it possible for them to access, control, and transfer their data.

5. Technology-agnostic: Rather than relying on a single technology or standard, a technology-agnostic approach to delivering data access, control, and portability is preferable because 1) it enables a broader set of stakeholders to participate, including small non-bank financial institutions and fintech startups; 2) codifying a specific standard or technology can slow down innovation when the private sector must wait on the government to define standards; and 3) system performance improves when multiple data transfer mechanisms are available to provide resilience against outages and other related issues that can impact reliability.

A decision on open banking in Canada is expected to take place this fall. We are excited to work together with Finance Canada and our colleagues in the fintech and financial services sectors in the months ahead—to help chart a course that gives Canadian consumers the increased choice and control they deserve when it comes to their financial well-being.