Ranks 8th out of 10 overall on innovation, trust, adoption and regulation
- UK, China and the US outrank Canada in open banking readiness
- Canadians most concerned about cybersecurity and data protection
- Banks can help increase open banking adoption through consumer education
TORONTO, Feb. 5, 2019 /CNW/ - The EY Open Banking Opportunity Index reveals Canada is behind its global peers when it comes to readiness to thrive in an open banking environment, landing in 8th position after the UK, China and US.
"Open banking is steadily but slowly progressing in Canada," says Abhishek Sinha, EY Canada Open Banking Leader. "It allows consumers to share their data with third-party providers and easily access a wider variety of financial services. The benefits for customers are big, and the opportunity for banks is even greater. Some are already investing in this space, but more need to start considering how they'll maximize the opportunity."
The Index, which assesses country performance across four high-level pillars, found Canada ranked 5th for innovation environment due to a thriving FinTech industry, private investment and government support for startups. The results were less positive for consumer sentiment (8th), adoption potential (10th) and regulatory environment (10th).
"Open banking will succeed only if customers trust that their data is safe, and many Canadians still need winning over when it comes to sharing their information online," says Sinha. "This is especially true of older generations, whereas millennials are more comfortable with the idea."
A review of online sentiment across social media, blogs and forums finds 31% of consumers are positive about open banking compared to just 9% who are negative. Concerns around cybersecurity and data protection accounted for 41% and 15% of all negative posts respectively.
Trust among consumers is, in part, responsible for slow adoption. Only 18% of Canada's digitally active population are using two or more FinTech services, and only 44% of smartphone users have adopted mobile banking.
"A crucial component to accelerating the adoption of open banking is having the right regulatory framework in place to manage customer privacy and consent – something Canada's Advisory Committee on Open Banking is working on now," says Anthony Rjeily, EY Canada Financial Services Digital Leader. "But regulation is not a prerequisite for a healthy open banking system. Bankers can make meaningful progress by coordinating internal initiatives, opening their platforms to innovators and proactively promoting digital adoption to consumers."
Access Canadian highlights of the EY Open Banking Opportunity Index.
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