A form of open banking is coming to Canada. Called “consumer-directed finance,” the concept aims to wrest some of the control banks seem to have over their customers and other service providers.
In essence, a client of a curmudgeonly financial institution could authorize access to their data, at which point a third-party provider may leverage secure application programming interfaces to access the data stored at the institution. From there, providers can use the customer’s data for innovative services and products. A client’s ability to leverage their own data across multiple providers, such as fintech startups, returns some power to their investing hand.
Ontario’s Portfolio+ is looking to the lead the charge of consumer-directed finance in Canada.
According to the Stouffville-born fintech firm, open banking is “an emerging framework in financial services that puts consumers in control of their financial data, allowing them to securely share financial transaction data that’s traditionally held at financial institutions with authorized third-party providers.”
Portfolio+, which is cultivating an ecosystem of open banking software, believes the framework makes it easier for consumers to move money between financial institutions while providing more options as the system evolves. The company notes that consumer-directed finance “also creates opportunities for businesses by encouraging competition in the financial services marketplace.”
The Canadian company points out that the banking industry in Canada is quite entrenched, with the “Big Five Banks” dominating the country’s financial sector for nearly two centuries. Portfolio+ does not want to tear them down, but rather build on their incumbent stability to create a more innovative and flexible financial sector.
While the benefits to consumers and third-party providers are fairly obvious by this point, it’s less clear what banks might get out of this set-up. Are they at risk? Not so, assures Portfolio+.
“For many banks, consumer-directed finance provides them with new ways to improve personal banking experience,” explains Adam Long on the company’s blog. “Banks are not just tied to one banking system and one vendor; They have new opportunities to improve the personal banking experience for their customers, gain new partnerships, and explore new product and service offerings.”
As open banking gains steam in Canada, Portfolio+ is experiencing a boom in business and needs a bigger team to further innovate financial technology and empower retail investors and fintech startups across the country.
To help bolster their workforce the company is participating in Tech Talent Canada’s next virtual job fair on February 23rd.
Looking for a cool opportunity in Canada’s fintech space? The event is free for job seekers!