This overall score derived from sub-scores in three broad categories:
- Open banking: posts mentioning “open banking” explicitly or referring to the Revised Payment Service Directive (PSD2). The net positive sentiment here was 21%.
- Sharing financial data: posts that discuss sharing of financial or bank data with third parties. The net positive sentiment was 36%.
- Services: posts that discuss apps, tools or services of the type enabled by open banking. The net positive sentiment was 25%.
Discussions about innovation (38%) were by far the top driver of positive sentiment. Consumers’ major concern was cybersecurity, which accounted for 41% of all negative posts on open banking. There is also clearly some fear and skepticism of change, with innovation accumulating 19% of negative posts. Data protection was the subject of 15% of negative comments.
The bottom line is that many Canadians are uncomfortable sharing their data online; however, that sentiment is improving as more innovative offerings emerge, at least among younger consumers.
Innovation projects begin to take root
Among the four pillars, Canada’s innovation environment was the strongest of the pillars, placing Canada in fifth place. Canada has a thriving FinTech industry, plenty of private investment, government support for startups, with Toronto ranked as a leading global tech hub. The Index ranked Canada third after China and the US for the number of patents filed by its main banks and FinTechs in 2017. It also ranked first for its broader research and development environment.
Data aggregator Flinks already claims to connect to more than 250 million Canadian financial accounts, and several of the big banks have announced individual initiatives of their own. In March, RBC was the first large Canadian bank to launch an API developer portal. The portal will allow eligible external software developers, industry innovators and clients to access select RBC APIs so they can more easily integrate the bank’s services into their own products.
The Platform Organization (also known as PLATO) is a group within Scotiabank that rapidly develops new services and tools. It is now sharing applications it has developed with the open-source software community. While neither of these initiatives are technically open banking, they will lay the important groundwork for future open banking initiatives.
Open banking’s future in Canada
Open banking in Canada does not yet exist as it does in the other markets in the Index, and considering the current environment, the transition toward open banking is more cautious.
But there are powerful incentives for banks to pick up the pace. It is likely that consumers will begin to demand the kind of individually tailored products and services that open banking makes possible. Banks that are prepared can better fend off competition, and perhaps become the competition - winning new customers from open banking laggards. Bankers should also bear in mind that regulators may become more assertive if the industry resists adopting technology that is deemed in the best interest of consumers.
For these reasons, we believe it is critical that banks follow these three steps to move open banking forward: coordinate their internal initiatives, open their platforms to innovators, and proactively promote digital adoption to consumers. If these steps are taken, it could put Canada on the fast-track to delivering greater value to consumers.