Imagine being able to use a single phone app to control your entire financial life. Imagine being able to obtain sound financial advice through this single app, as well.

This scenario will be a reality in a few years if open banking comes to Canada. This system will enable customers to control their financial data and share it with others.

Today, companies depend on workarounds and one-on-one partnerships to access customers’ data — a process that can be insecure, unstable, and costly. Open banking remedies that problem by establishing a standardized, controlled, and mandated way of data sharing. This promotes innovation in financial services, from improved comparison shopping of financial products to cash-flow automation.

“An open banking system will allow customers to view and manage their financial portfolio in one place, access a wider range of competitive products, and benefit from innovative financial advice solutions by democratizing access to data,” says Rob Galaski, Head of Financial Services at Deloitte.

Ottawa studying system already in place in Europe, U.K.

Open banking regulations have already been introduced in several countries around the world. The United Kingdom and the European Union are at the vanguard of change — both have established legislation and regulations requiring banks to build the infrastructure and tools necessary to share data. They have also started to offer accreditation to third parties that are qualified to access and handle customer data.

Last summer, the Canadian government said it was looking into the merits of open banking. It made that statement in a consultation paper that was part of a review of the Bank Act.

Ottawa also referred to open banking in its federal budget last month, stating that it has the potential to spur innovation and competition in the banking sector.

Security issues need to be addressed

But as interest in opening banking grows, so does concern about privacy and data security. In an online survey conducted by Accenture last year, all but one of 100 payment executives at big banks around the world said they were planning to invest in open banking by 2020 — but half of the respondents also expressed concern about security risks.

The Trudeau government has noted that if an open banking system were to be implemented it would have to have the "highest regard" for consumer privacy, data security, and financial stability.“

Open banking cannot be seen as a stand-alone regulation as it will both influence and be influenced by the way we approach security, privacy, liability, and identity within and outside of financial services,” says Galaski. “Moreover, open banking will open doors for non-financial institutions to play a role in customers’ financial lives, which will raise questions about how we define and govern financial institutions in the future.”

As we look toward open banking in this country we are “in the unique position of being able to benefit from the lessons learned by the UK and Europe,” Galaski said. “It will be very interesting to watch this unfold and see how the landscape develops here at home.”