Interested in Open Banking? You’ll need a mature Data Governance program
This isn’t a hot topic yet in Canada, but it’s very important to know that our Federal government is in the process of defining Open Banking legislation to make this real. For those that want to play in this game and have a bit of FOMO we have some advice for you on how to get ready while the rules are still being sorted out.
What is it?
Open Banking allows customers to transfer their personal and financial data among financial institutions and third party service providers. This data transfer gives customers access to a more complete financial picture and opens the door to services to improve their financial health.
Who is impacted?
These services create more competition in the Financial and Insurance industries which will result in access to low cost products and automated support to help better manage their finances. Looking forward, it won’t be long before Open Banking benefits every industry that has a D2C or B2B relationship.
Why does it matter?
Open Banking helps to create equity for those who might not have the opportunity today, for example:
- New Canadian citizens
- Individuals with a limited credit history
How is this possible? Additional personal and financial data shared between financial institutions provides insights that simply are not available today, which help financial institutions offer more products.
In addition, it will:
- Speed up financial experiences with streamlined processes and auto adjudication
- Simplify all experiences – even taxes and payroll for small businesses
This is very disruptive to banking as we know it today. I believe this change can be compared to the introduction of the smartphone. Where you once had to go to multiple locations and do shopping and research for the best financial and insurance products, you will soon have service providers that give you options tailored to you, and create agreements with a few clicks.
What information is involved?
At the core of this disruption is the broader use of your personal information. Name, Address, Contact, financial transactions and publicly available data about you is required to reap the benefits of Open Banking. These are the most sensitive types of data. It is very important to note that we’re jumping into what we currently believe to be the creepy side of data use ethics.
What’s going on now?
The Canadian Government is focusing on accreditation, liability, privacy and security. However, they are not discussing the weakest link – actively managing customer data in these automated systems. Based on the information available today, the Canadian Government is leaving the responsibility of Data Governance and Data Management on the shoulders of Financial, Insurance and Service Providers involved with making Open Banking happen real.
I’ll note timelines are generally unclear and all further discussions have shifted to behind closed doors, outside of public record. We are, though, expecting movement from the Canadian government in 2023.
What can I do to get ready for Open Banking?
Your ability to manage your data today will have a direct impact on how risky it is for you to enter into the world of Open Banking. If you don’t have a plan to mature your data management capabilities such as…
- Data Security & Privacy
- Master Data Management / Customer 360
- Identity Management
- Data Quality
- Data Residency
- Data Retention
- Consent & Preferences
…then now is the time to start.
If you jump into Open Banking without a strong foundation in Data Governance, you will experience fraud, operational nightmares, reputational risk and, frankly, you will risk the success of Open Banking in Canada as a whole. It’s clear that if you want to play in the Open Banking space, an active and mature Data Governance Program is critical to success.
Let us help you get ready! Contact us for more information on how to get started.