By Alex Vronces
We’ve been waiting for the advisory committee’s open banking report, as well as the appointment of an open banking “tsar,” for a long time. Everyone has been saying “any day now” for the past few months.
While I’m eager to see the open banking report, I’m less excited to see the appointment of an open banking “tsar.” As Vass Bednar recently said, people are no substitutes for policy — especially people who, presumably, will have no mandate to actually compel Canada’s financial sector into action.
Yet I digress.
Back to it: we’ve been waiting for a long time and people are wondering why.
Here are some of my (purely speculative) explanations for the delay, which go from mundane to Machiavellian.
1. According to the Financial Post’s Kevin Carmichael, “Chrystia Freeland has in her possession a blueprint that could revolutionize financial services.” But Minister Freeland and her team have been busy with other things. Minister Freeland was busy with G20 meetings. There was also all that had to get done in the government’s 2021 budget, which made no mention of open banking. So she’ll get to releasing the open banking report and picking a “tsar” when she gets to it.
2. Many in the fintech community have asked for an open banking “tsar,” along with the release of the report. The idea is to give the open banking movement a champion, someone who can pound the financial sector’s pavement and get big banks moving — presumably without any real government-imbued authority to do anything. For obvious reasons, it may be difficult to find the right person for such thankless, challenging work. Someone with the status that’s necessary to get big banks moving is likely already in a high-status position, and so why leave for what is likely a demotion? Maybe it’s taking a long time to find a “tsar,” which is resulting in the delay to release the advisory committee’s report.
3. You’ve likely heard all the speculation that there will be an election soon. Either way, the government looks like it’s already in campaign mode with all the speeches and announcements around the country. As badly as fintechs want to see open banking, there’s a view that open banking isn’t going to get this government a political win. It’s possible the report and “tsar” announcement are delayed because the government is trying to find the right time to bury them in the communications schedule.
4. The government is in campaign mode and open banking doesn’t just fail to get them a political win; there’s also a small risk it gets them a political loss. Canadians generally trust their banks, some people distrust technology companies, and so the idea that financial data will be shared more freely may attract a certain substance and style of criticism. The calculus doesn’t work in open banking’s favour: small possibility of political loss plus no possibility of political gain equals do nothing until after the election.
5. Maybe the government is getting ready to trade horses with the big banks. The government recently threatened to regulate interchange fees, which would cost banks millions, if not hundreds of millions or billions, of dollars. There’s also payment system modernization, which banks like to remind us is complex and costly. The Bank of Canada is exploring issuing a central bank digital currency, a particular version of which threatens bank deposits. The list goes on from there. With so much going on, if the government is anticipating a horse trade after the election, it’s possible they’re keeping their horses close — including the one called open banking. If there’s little to gain from open banking politically, and more to gain from, say, interchange fee reductions, maybe the government will tell the banks, “Give us some basis points and we’ll give you a bit on all these other financial sector policy files, including open banking.”
I don’t know which of these explanations are true, if any of them are. But they seem plausible to varying degrees.
Which ones have I missed?