TORONTO (Reuters) - Banking customers in Canada are already sharing their financial data with third-party providers "in a significant way," but a more secure infrastructure would protect them better, according to a report on the first phase of a government review on open banking that was released Friday.
The Advisory Committee on Open Banking will begin a second phase in the spring to look into the merits of open banking, focusing on data security in financial services, and will report its findings to Finance Minister Bill Morneau later this year, according to a statement from Canada's finance department.
Open banking is the practice by which consumers allow third-party providers access to their financial data. The report refers to it as consumer-directed finance.
While open banking regulations have already been adopted in places like the European Union, the United Kingdom and Australia, Canada has lagged. Despite the lack of regulations, as many as four million Canadians use data-driven services to share access to their data, according to the report.
"While there are risks the Committee found that these risks exist in the current unstructured environment and implementation of a structured framework could serve to better address and manage them," according to the report.
The committee noted that a timeline of about one to two years is "reasonable" to deliver consumer-directed finance, and recommended examining issues including consumer control of personal data, privacy and security in the second phase of the review.