senators’ statements — Open Banking

December 9, 2020


[14:17]

With the remainder of my statement? Yes, if I could, Your Honour.

I’ll start back. As Senators Marshall, Stewart-Olsen, Verner, Wallin and Doug Black no doubt recall, initially the idea wasn’t fully embraced. But, after learning from expert witnesses and debating the issue, we unanimously recommended that Finance Canada take urgent action.

The Hon. the Speaker
[14:17]

Again, Senator Deacon, you are now into business that, according to the rule, ought not to be brought up during Senators’ Statements. So if you want to proceed under the rule, you may proceed and alter your statement to that effect, but the statement, the way you’re giving it now is contrary to the rule.

[14:18]

I understand now. I apologize, Your Honour. I’ll go on and just say, so what is open banking, now called consumer-directed finance? At its core, it is a structure that provides individuals and businesses with the right to safely use their financial data for their own benefit.

But why does this matter? When consumers control their own data and direct their bank to safely share that data with an accredited financial technology company, or fintech, consumers can receive highly valuable insights or services. Here are just two examples:

Precarious workers have incomes that are marginal and variable that is detrimental to their well-being. Fintechs look at data differently from banks so they can provide low- or no-cost short-term loans, an important alternative to high-cost payday lenders.

Second, small businesses can rarely access credit through traditional lenders because they lack the required income or assets. But Senator Wetston and I have found that fintechs use innovative data and methods to uncover highly creditworthy businesses and individuals from within a population that are otherwise invisible to our banks.

Close to 1 million Canadians are unbanked, and 5 million are underbanked. What we found with consumer-directed finance is that marginalized Canadians can very much further their economic well-being because of the use of alternative data.

I’m grateful for the efforts that have been made by many groups to make sure that our new Finance Minister prioritized consumer-directed finance where our previous finance minister did not, and, as a result, consultations on this issue restarted on November 30. They are ongoing as we speak and, as a result, Canadian consumers, businesses and banks are all going to be much better off.