A new federal proposal to launch “open banking” is being met with suspicion from Canadians who say they don’t understand the concept and fear it may compromise their financial security, according to government research.The Department of Finance has been studying open banking since 2017 and claims the system would help consumers by allowing them to shop around online for better financial rates by sharing their banking data with third-party technology companies, reports Blacklock’s Reporter.However, a new study by the Financial Consumer Agency of Canada found that few people know what open banking is and even fewer trust it. “Awareness of the terms ‘open banking’ and ‘consumer-driven banking’ was nearly non-existent,” said the report. “Very few participants expressed familiarity with the terms ‘open banking’ or ‘consumer-driven banking’ with some guessing the terms could refer to sharing data with financial institutions or having more control over personal banking data.”.The language itself raised red flags. “The word ‘open’ in ‘open banking’ led to immediate skepticism as it suggested vulnerability rather than security, and multiple participants shared concerns about fraud and data breaches,” said the Focus Testing of Visual Identifiers for Consumer-Driven Banking in Canada report.The alternate phrase “consumer-driven banking” didn’t do any better. “‘Consumer-driven banking’ was perceived as vague and like a marketing buzzword, with some participants feeling it lacked a clear meaning,” the researchers wrote.The study involved 10 focus groups and cost taxpayers $76,829. It concluded that the federal plan would struggle without stronger public engagement. .“Consumer protection and awareness will be essential to build trust, understanding, and interest in consumer-driven banking among Canadians,” the report said.“Given the nascent stage of consumer-driven banking in Canada with limited public awareness and understanding, this research assesses how well the term ‘consumer-driven banking’ and other potential terminologies communicate its meaning,” said Focus Testing. “This study explored whether alternative terms such as ‘open banking’ clarify the meaning of consumer-driven banking, enhance trust, and convey a sense of control over personal data.”The findings follow a 2021 report from a cabinet advisory panel that called for all chartered banks to join the open banking program by 2023. That deadline has come and gone..“The possible benefits of open banking to Canadian consumers and the Canadian economy are real and potentially very significant,” testified Professor Christopher Nicholls of the University of Western Ontario’s law faculty. Nicholls said gains included “more effective price and service comparison shopping and by making switching from one service provider to another easier.”“Who owns the data?” then-Senator Howard Wetston asked during a Senate committee hearing. “It may be a contentious issue,” replied Nicholls.
