Carney’s Open Banking Strategy: The Missing Ingredient

Abstract: Lots more Linkedin posts on open banking, a sure sign that Ottawa is at it again. Although it all seems very positive, I am concerned that the core issue of consumers sharing financial data remains unresolved. The country has never aligned on which use cases genuinely matter to consumers. Unlike the UK, which advanced only after regulators mandated standardised APIs, or the US, where industry informally agreed on practical consumer needs, Canada’s consultations have produced competing narratives about rights, privacy, innovation, and security. This lack of consensus has delayed investment, confused priorities, and left consumers unsure of the benefits. For the lending community at www.canadianlenders.org, the most compelling and feasible consumer value lies in faster onboarding, reliable permissioned data access, better risk assessment, and efficient payment initiation. A focused approach, starting with validated use cases, targeted liability rules, and practical pilots, would allow Canada to move beyond discussion and begin building tools that produce measurable value for borrowers.

The Carney Government’s renewed commitment to open banking, reflected in recent federal budget announcements, has revived a debate: standards vs adoption. Much of the discussion has centred on technical standards, liability frameworks, and accreditation. But the more basic question may be why progress stalled in the first place. We still need to explain to Joe Consumer what open banking should deliver for him.

The UK faced a similar challenge a decade ago. When negotiations between banks, fintechs, and policymakers reached an impasse, the Competition and Markets Authority intervened. Banks were instructed to develop standardised data-sharing interfaces. The approach was neither subtle nor widely celebrated at the time, but it provided a common technical foundation. This enabled account aggregation, payment initiation, and more efficient credit assessment tools that are now part of everyday financial activity in the UK.

The United States followed a different path. With no formal federal framework, private firms built data-sharing networks based on shared expectations of consumer needs: consolidated account visibility, streamlined payments, and faster credit decisioning. The result is uneven in places, but it works because the industry reached a practical understanding of value before attempting to standardise it.

Canada’s consultations have been extensive, yet they have not produced consensus on priority use cases. Stakeholders describe the purpose of open banking in different ways. For some, it is a matter of data rights. For others, it is principally a question of privacy and liability. Fintechs emphasise innovation, while banks emphasise security. Consumer advocates highlight control, yet public awareness remains minimal.

This lack of alignment has practical consequences. Without a shared view of which use cases merit early focus, investment remains cautious and policy design becomes diffuse. The result is a framework that acknowledges the potential benefits of open banking but does not clearly define which of those benefits should come first.

For the CLA

For the lending community represented by www.canadianlenders.org, the most immediate sources of consumer value are well understood. They include:

• Reliable, permissioned access to financial data for affordability and income verification.
• Faster onboarding that reduces the need for manual document uploads.
• Consistent, machine-readable data that lowers error rates and facilitates more accurate risk assessment.
• Payment initiation tools that reduce costs and settlement delays.

These improvements address real frictions that consumers experience when applying for credit or managing their finances. They also reduce operational inefficiencies for lenders. Importantly, they are neither speculative nor controversial; other jurisdictions have already demonstrated their usefulness.

The debate often blurs two categories: features that genuinely help consumers, and features that primarily reflect institutional priorities. Distinguishing between the two is essential. Clear consumer validation, through research, behavioural testing, and pilot programs, would help Canada focus on the most widely supported use cases rather than the most frequently advocated ones.

A pragmatic path forward …

• Establishing a short, consumer-validated list of first-wave use cases.
• Building accreditation and liability rules around those specific functions rather than a broad theoretical model.
• Encouraging pilots led jointly by lenders, banks, and fintechs to test outcomes in real conditions.
• Allowing standards to evolve gradually rather than attempting to settle every issue at the outset.

This approach mirrors the experience of other countries that moved from consultation to implementation only when the industry reached clarity on objectives.

Open banking in Canada is unlikely to succeed on technical design alone. Its impact will depend on how effectively the ecosystem converges on a set of use cases that consumers find meaningful and that institutions can implement with confidence. The lending community already sees where open banking could reduce friction, improve risk assessment, and deliver clearer benefits to borrowers.

A modest but focused consensus on consumer value would provide the direction that has been missing. It would also turn open banking from an ongoing discussion into a practical tool for improving financial services.

Five Main Points

1. Canada’s open banking efforts stalled because the industry never agreed on which use cases consumers actually want or need.

2. The UK and US moved ahead only after achieving clarity—through government mandate in Britain and market-driven alignment in America.

3. Canada’s debate remains fragmented across themes of rights, security, innovation, and control, leaving consumers largely uninformed and unengaged.

4. For lenders, the clearest benefits involve faster onboarding, permissioned access to financial data, better affordability assessment, and more efficient payments.

5. Progress depends on starting small with consumer-validated use cases, targeted rules, and pilot projects, allowing standards to evolve pragmatically rather than theoretically.