• Deborah

Open banking, or consumer-directed finance, is a system that would enable consumers to use secure online channels to transfer their financial data between financial institutions and accredited third parties.


Open banking is regulated under the Open Banking Directive in the UK and by the Second Payments Service Directive (PSD2) in the EU. Authorized entities are allowed to securely share their customers financial data with third-party service providers (TPPs) through the use of application programming interfaces (APIs) and solely with the consent of customers. TPPs refers to

  • Account information service providers (AISPs) that collect and consolidate information on the different bank accounts of a consumer in a single place,

  • Payment initiation service providers (PISPs) that help initiate a payment from a user account to the merchant account by creating a software “bridge” between these accounts,

  • Card issuers service providers (CISPs) who do not hold clients funds but provide information about the funds availability on payment transactions based on the payment cards.

The open standards for APIs will facilitate the use of client bank data by Fintechs in order to drive innovation while providing clients with a greater degree of control over the use of their data.


In Canada, open banking is yet to be regulated. An Advisory Committee on Open Banking (the Advisory) created in 2018 with the mandate to conduct a review into the merits of open banking to assess whether it could have a positive impact on consumers while considering the risks to consumer privacy, data security, and financial stability. The Advisory released a final report (see our summary here) that includes recommendations on how to implement a secure open banking system.


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