24 April 2025 • 6 minute read

Introduction to open banking in Canada

Written by:Eric Belli-BivarWayne Cente (Articling Student)

Canada is progressing towards implementing a comprehensive open banking framework, also known as consumer-driven banking. This initiative aims to empower consumers and small businesses by allowing them to securely share their financial data with approved service providers through an application programming interface.

What is open banking?

Open banking, or consumer-driven banking, aims to provide consumers with safe access to financial products and technologies by enabling them to share their financial data with chosen “participating entities”. Open banking is intended to give consumers greater control over their financial data while at the same time providing them with access to innovative financial products and services. Open banking is expected to create opportunities for start-ups and financial technology companies (fintechs), such as Wealthsimple and Wise, by offering user-friendly and innovative financial products. Beyond fintechs, participating entities will likely include entities that offer deposit accounts, investment accounts, payment products, loans, and other regulated financial products and services.

Although open banking isn’t yet available in Canada, countries like the United Kingdom and Australia have already implemented it to streamline financial data transfer between fintechs and banks while maintaining users’ security and privacy. In Canada, we await the enactment of the application provisions and associated regulations of the Consumer-Driven Banking Act to determine which entities may participate in the system and how to do so. The Financial Consumer Agency of Canada will maintain a public registry listing all participating entities and relevant information about each.

How open banking works

Open banking enables consumers to find tools and applications that can help them manage their finances. These tools and applications prompt consumers to link their bank accounts to access their financial data. Consumers then authorize their banks to share financial data via open banking. The financial data is shared using a secured online channel. This process does not require sharing account usernames and passwords, which protects consumers in the event of unauthorized transactions, data breaches, or fraud.

Benefits of open banking

Open banking offers numerous benefits for consumers, small businesses, and the economy.

Consumers: secure access to a broader range of financial tools, greater control over financial data, and improved financial outcomes.
Small businesses: reduced administrative burden, faster loan adjudication, and integration with accounting, tax, payroll, and other software.
Canadian economy: enhanced global competitiveness, growth and innovation in the financial sector, and support for economic resilience.

Current practices: Screen scaping

Currently, there is no established secure system in Canada for safely sharing financial data from a consumer bank account with service provides, aside from direct interactions with the consumer bank. Screen scraping is a method used by fintech apps to access financial data by requiring users to provide their online banking username and password, allowing the app to log into the user's bank account and transfer data to an external database. While it can provide access to services similar to open banking, it poses significant security, liability, and privacy risks. Sharing online banking credentials with fintech apps means losing control over this information, which can lead to unauthorized transactions, data breaches, and loss of protection from the bank. Consumers may be responsible for any losses or changes to their financial products and services, even if the app has security measures in place.

Canada's open banking framework

Open banking is not yet available in Canada, but the government is actively developing a secure framework to implement it in early 2026. To provide Canadians with the latest innovative financial and banking tools, the government introduced Canada’s Consumer-Driven Banking Framework in Budget 2024 and enacted the Consumer-Driven Banking Act in June 2024. This Act established the foundational elements of scope and technical standards and designated the Financial Consumer Agency of Canada (FCAC) as the lead agency. A primary focus of Canada’s Consumer-Driven Banking Framework is the safe and secure sharing of financial data for Canadians and small businesses.

The development of Canada’s Consumer-Driven Banking Framework is guided by three main public policy objectives:

Safety and soundness: ensuring the financial sector's safety by addressing security risks from current data sharing practices like screen scraping and establishing oversight of financial data sharing activities;
Consumer financial well-being and protection: allowing Canadians to securely access and use their financial data to improve their financial outcomes and benefit from innovative products and services; and
Economic growth and international competitiveness: creating a cohesive framework with clear accreditation to support the security and stability of the Canadian financial sector while fostering innovation and competition.

These objectives have shaped the government's approach to six core elements of the framework:

Governance: oversight and management of the framework.
Scope: defining the types of data, functionalities, participants, and expansion pace.
Accreditation: setting requirements and processes for participation in consumer-driven banking.
Common rules: protecting consumers and governing privacy, liability, and security.
National security: safeguarding the integrity and security of the framework and financial system.
Technical standard: establishing and overseeing the technical standards for data flow between Canadians and financial tools.

The policy statement further outlines the government's position on these core elements to provide clarity to consumers and the industry.

The Department of Finance will develop supporting regulations for the consumer-driven banking framework and engage with stakeholders and Canadians through public consultations. The FCAC is preparing for implementation and will continue engaging with the industry to ensure a successful launch.

Conclusion

Canada's open banking framework represents a significant advancement in the financial sector, offering consumers and small businesses secure access to innovative financial services. This initiative is poised to enhance financial literacy, improve financial outcomes, and support economic growth.

Feel free to reach out if you have any questions or need further assistance regarding open banking and its implementation in Canada.

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