The Canadian Bankers Association says the government should think carefully before embracing open banking, warning that increasing third party access to financial data poses major risks not only to customers but to the entire economy.
In August Canada's department of finance said that it would investigate the merits of following the UK and Europe in pursuing an open banking model, making it easier for people to let third parties access their banking data, paving the way for fintech firms and others to take on the establishment.
In response (PDF), the CBA, which represents more than 60 banks, has talked up the risks of such a move, warning that increasing third party access to data and systems could threaten consumers' security and privacy.
"In addition, consideration must be given to the potential impacts on the safety, soundness and stability of the overall financial system in Canada, given the potential for third party access to give rise to contagion, reputational and other types of risks with broad-ranging consequences, and for the ability of banks and other market participants to manage their legal obligations."
The association says that it would "welcome the opportunity" to work with the government on understanding the risks and how they can be mitigated before considering an open banking model.
The open banking question is part of a wider government consultation on the financial sector framework, which also addresses how banks can work more closely with fintech firms.
In response to this issue, the CBA is calling for changes to the Bank Act, arguing that it precludes banks from having some relationships with fintech firms, encouraging startups to turn to private equity firms or large tech players.
The association says the rules should be changed to make it easier for banks to invest in fintech firms, arguing that the "legislative obstacles were imposed at a time when there was less clarity on the critically important link between technology and banking activities".
Neil Parmenter, CEO, CBA, says: "Banking is evolving at record pace. It’s critical that the legislation governing the industry reflects this reality and facilitates the investments in technology that will keep Canada a leader in financial services innovation."