Technology is making the lives of consumers easier by making services easily accessible. With the click of a button, consumers can now have groceries delivered to their homes, purchase those last-minute Christmas gifts, and even fund their iGaming accounts. But consumers in Canada need more choices when it comes to gaining access to diverse financial services. This is where Open Banking comes in. According to the Government Of Canada’s website, Open banking is a secure way for consumers to share their financial data with financial technology companies. While open banking has been popular in regions such as Europe, markets like the US and Canada are yet to catch up. But there is hope. Open banking discussions are happening in Canada right now, with the initial phase of open banking coming to Canada as early as 2023. With these discussions well underway, it is important to know the benefits of open banking. While there are multiple, we’ve put together two of the strongest reasons why Canada will benefit from open banking.
Better Choices For Consumers
A big part of open banking is the sharing of financial data in a secure manner. Once a consumer provides consent, third-party service providers can then access the consumers’ data (which is currently owned by the banks) through application programming interfaces (APIs). According to Forbes, this data can include things such as:
Name on the account
Date of account opening
Transaction history, including how much you spent and where
Now, what’s in it for the consumer? When this data is shared with third-party service providers, they use it to provide solutions that meet a consumer’s needs. This could be a credit card with lower interest rates, or a chequing account with lower yearly fees. This way consumers are able to have access to a variety of products that save them money and fit their needs.
A Single Place To Track Your Finances
Whether it is using a fitness application to know how many steps they’ve walked in a day or monitoring their water consumption, people are using technology to better their lives. And this is where open banking can provide another benefit for consumers. Third-party applications which have access to a consumer’s financial data can provide a single place for a consumer to track their finances. So even if a consumer has two chequing accounts at two different banks, they can access information from both accounts through one third-party application. Consumers can view and keep track of all of their financial information in one place without having to log into multiple accounts. Using that data, third-party applications can also provide budgeting tools, which help consumers to achieve their financial goals.
While open banking in Canada is still in its infancy phase, it has begun to capture the attention of consumers and businesses alike. Despite being a year away, the initial phase of open banking will bring benefits to Canadians such as custom finance-linked services.