OTTAWA — Canada is moving to implement open banking under its newly finalized Consumer-Driven Banking Act, a shift that will give consumers control over their financial data and end the traditional model in which, much like the U.S., financial institutions effectively owned that information.
The legislation establishes a national framework allowing individuals and businesses to securely share their financial data with approved third-party providers, such as financial technology firms, budgeting platforms and payment services. The Bank of Canada will play a central oversight role in supervising the system’s infrastructure and ensuring it operates safely and efficiently.
Open banking — referred to in Canada as “consumer-driven banking” — allows customers to authorize the transfer of their financial information through secure application programming interfaces, or APIs, rather than relying on methods such as screen scraping, where users share login credentials with outside services.
Supporters say the change is intended to increase competition, spur innovation and give consumers greater visibility and control over their finances.
How it Will Work
Government officials have framed the move as a modernization of Canada’s financial system, aligning it with similar frameworks already operating in jurisdictions including the United Kingdom, the European Union and Australia.
Under the new regime:
- Consumers will be able to direct banks to share their financial data with accredited third parties.
- Data sharing must occur through standardized, secure technical connections.
- Participants must meet privacy, security and liability requirements to gain accreditation.
- Customers can revoke access at any time, reinforcing that the data belongs to them rather than the institution holding the account.
Regulatory Focus
The Bank of Canada’s oversight is expected to focus on system governance, operational resilience and risk management as data flows expand among banks, credit providers and fintech companies.
According to analysts, financial institutions will still hold and safeguard account information, but they will no longer control how that data can be used once a customer authorizes sharing. Policymakers say that shift is designed to rebalance power toward consumers while maintaining strict privacy protections under existing Canadian law.
Banks have cautioned that implementation will require significant technology investment and careful coordination to avoid fraud and cybersecurity risks. Fintech firms and consumer advocates, meanwhile, say the framework will lower barriers to switching providers, improve access to credit and enable more personalized financial services.
The rollout will occur in phases as technical standards are finalized and firms seek accreditation, with regulators emphasizing a gradual transition to ensure stability in Canada’s tightly regulated financial system.
Open Banking in the U.S.
The CFPB had laid the groundwork for open banking in the United States under the Biden Administration, but those plans have been backburnered by the Trump Administration.
