Open Banking Not a Panacea: Risks and Opportunities for Canadian Banks and Credit Unions

After a nearly seven-year wait since Budget 2018, the Canadian government finally published Canada's framework for consumer-driven banking shortly before Christmas 2024, with the expectation to launch open banking in early 2026.

-- We consider there are risks associated with open banking, including data security and privacy, which need to be closely monitored by financial institutions and regulators.
-- Open banking is likely to foster competition and include smaller players in the banking ecosystem by reducing barriers to operating.
-- We expect open banking to help financial institutions deepen client relationships, one of the key retail banking strategies, by offering tailored products, advice, and solutions for clients.

"In our view, open banking adaption in Canada will take time," said Jiani Wu, CFA, Vice President, North American Financial Institution Ratings. "Additionally, we expect the Big Six to continue to dominate the Canadian banking sector over the intermediate term."