Could Alberta Enact a Sub-National Open Banking Regime?

Open banking is successfully operating, and has proved beneficial, in many countries. But Canada has not yet adopted it. Alberta doesn’t need to wait for the federal government to implement a national framework to benefit from this innovation. Using international precedent, this article charts a pragmatic course for how the province can immediately participate in the benefits of open banking, open finance, and consumer data portability, without requiring a complex sub-national regulatory and governance structure like the federal approach or expending scarce provincial policy resources. Using a market-facilitative approach, the province can utilize existing initiatives to take an accommodative and active advisory role to data portability use case development, foster market-driven use cases and industry partnerships through the Financial Innovation Act (FIA) regulatory sandbox, and utilize the existing Invest Alberta Financial Services Concierge to reduce frictions and barriers to market entry for data portability firms and open finance entrepreneurs. Open banking creates a safer underlying ecosystem to share consumer financial data, develop data applications and new technology-driven financial products and services in a more secure way than screen scraping. This innovation promotes competition, enhances consumer product comparisons, lowers switching and transaction costs, creates new efficiencies, and allows financial product and service providers to tailor new customer offerings to individual needs. The federal open banking framework still has many implementation barriers, uncertainties, and frictions. Alberta can immediately develop expertise in consumer data portability by using the provincial regulatory sandbox established by the FIA. The FIA is a one of a kind initiative in Canada. The FIA sandbox allows banks and fintech companies to develop and test data portability use cases under supervised parameters with regulatory relief. Provincial regulatory authorities can review the risks and benefits in real time, with real data. The province can potentially leapfrog the national framework by developing expertise through the FIA sandbox in data portability use cases beyond banking and relating to a financial product or service (the defined legislative scope of the FIA). Technological development and applications, fostered through the FIA, may have use value beyond banking and within a larger financial ecosystem, as well as in energy, utilities, consumer retail data, government housed data and self-sovereign digital identity solutions. The province can take three immediate steps under a market-facilitative approach. First, engage in public-facing educational efforts on the benefits, use-cases, processes, accessibility, functionality, and successes of the FIA sandbox as applied to data portability. This may include developing principles for safe data sharing, and recommended design standards and guidance. Second, in conjunction with the FIA, utilize and promote the Invest Alberta Financial Services Concierge service as a gateway to open banking partnerships and the FIA sandbox. Third, investigate how to create and implement a provincial consumer data right (CDR), which would serve as a catalyst in the province for a myriad of data-portability use cases beyond banking to an open-data paradigm, including applications in energy, investments, insurance, utilities, telecommunications, consumer retail and self-sovereign digital identify.