A long-awaited change to Canadian banking is coming. What to know

Change is in the works that will give Canadian consumers and businesses significantly more control over their financial data, in what’s known as open banking. 

A long-promised revolution in banking is headed to Canada, but you might not notice when it arrives.

Change is in the works that will give Canadian consumers and businesses significantly more control over their financial data, including who they share it with, in what’s known as open banking.

The federal government has promised framework legislation in next month’s budget to bring the system to Canada after years of kicking the possibility down the road.

Evangelists for the open banking shift underway globally praise it as a way to boost competition, dramatically shift how payments are made and overall move to a more people-oriented financial system.

“It’s about having that fairer, more inclusive, more open society,” said Helen Child, founder of Open Banking Excellence, a forum for those working in the system.

Open banking works by giving consumers the option to share their banking data with other firms. The most common use is granting access to budgeting or money management apps and companies, so that a customer can pool different bank accounts and credit cards into one place.

Other emerging uses include simpler payments, automated accounting, and business finance management.

One of the biggest areas of growth is in credit assessments. Under open banking, lenders could directly access an individual’s banking data, so they can look beyond credit scores. Consumers can also use it to build their credit scores, for example by proving reliable rent payments.