Investment advice seen as a key benefit of open banking: survey

Nearly one in three Canadians believe they would benefit from the availability of investment advice through a national open banking model, according to a survey conducted by Deloitte Canada.

In an online survey of 1,030 Canadians, the consulting firm found that 66% see at least one benefit of open banking, a system that allows financial institution to share client account details (with consent) with a third party.

Among the most attractive use cases of open banking were the ability for consumers to get a complete financial picture of all balances across all their accounts (37%), the ability to track their spending patterns (33%) and suggestions for investment and savings opportunities (32%).

“Overall, it seems that Canadians can recognize the benefits of open banking and are likely to embrace it once it goes live,” the report concluded.

While only 35% of respondents said they are currently comfortable sharing banking data online, 45% of respondents said they would feel comfortable sharing financial data through open banking.

Consumers can currently share their banking details with third parties, but this often involves so-called “screen scraping” in which the client must first share their username and password with the third party. Screen scraping exposes clients to the risk of losing any protection a bank offers against unauthorized transactions, the report said.

In 2021, a government-appointed advisory committee recommended that open banking be up and running by January 2023.

A statement provided by the Department of Finance Canada says the federal government remains committed to presenting a read-only model of open banking this year, saying such a system would help Canadian consumers and small businesses access financial tools to help them improve their financial outcomes.

“Roughly six million Canadians are already using financial technology services that rely on screen scraping to access financial data,” the statement read. “This speaks to the importance of establishing an open banking framework in Canada with appropriate security and consumer protection rules in place.”

It added that consumer education will be essential to build trust and awareness in open banking, and that consumer education will be a shared responsibility between government and industry.

Indeed, the Deloitte study found that only 18% of respondents had even heard of open banking.

Raising awareness of the potential benefits of open banking will increase the likelihood of successful uptake once open banking is implemented, the Deloitte report said.

According to the Department of Finance Canada, Canada’s open banking lead, Abraham Tachjian has participated in over 200 stakeholder consultations since his appointment in March 2022. He has also led industry working groups on accreditation, liability, privacy and security.

“Mr. Tachjian’s focus continues to be on the work required to support the government in its commitment to presenting a read-only model of open banking in 2023,” the statement said.

The Deloitte survey, conducted in October 2022, was weighted to ensure the sample reflected the Canadian population according to the 2021 census. Online surveys cannot be assigned a margin of error because they do not randomly sample the population.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.