Canada finally moves the needle on Open Banking

Let’s set the scene. You hand your bank details to a third-party app. It logs in, reads your account data, and then copies your information to use elsewhere. The app keeps hold of your details, so it can go back in whenever it needs to refresh data.  

This is known as screen scraping. It isn’t the most secure way to share financial data, but it’s also the dominant method in Canada in the absence of defined regulations.  

But that’s changing. Slowly. Canada is building its own regulated Open Banking framework with the Phase 1 draft regulations now published and open for consultation. The new rules will roll out in phases, before fully kicking in within a year of final publication, which, realistically, points to a phased rollout around 2027.   

So what does this mean for PSPs, banks and consumers in Canada?  

Consumer-Driven banking

On June 27 2026, the Department of Finance Canada released draft Consumer-Driven Banking Regulations to operationalize the first phase of the country’s Open Banking scheme. There’s currently a 60-day consultation window. After that closes, it’ll take around 12 months to bring the regulations into force. 

Phase 1: Read access

This is what the current draft regulations deliver. Consumers securely share their financial data – deposit, payment, investment, lending account information – with accredited fintechs, PSPs and other institutions through APIs at no cost to the consumer.  

It’s a secure and consented alternative to screen scraping. This will power everyday Open Banking use cases like budgeting tools, smarter credit, affordability assessments and subscription tracking. For larger banks, participation is mandatory. Other institutions can choose whether to opt in.  

This phase will roll out in stages. On the participant side, accreditation comes first, followed by common rules and fees. On the data side, sharing is staggered in by account type. Deposit and payment accounts come first, then lending, followed by registered and non-registered investment accounts. It’s expected the full set will be in force within 12 months of the final rules being published.  

Around 9 million Canadians are currently sharing banking details through screen scraping. This leaves them vulnerable because if you’re the victim of a data breach or scam, there are no rules that say who’s liable. 

Phase 1 will put an end to this. It isn’t just about Canada getting Open Banking, it will finally close a regulatory blind spot addressed by other markets years ago. 

Phase 2: Write access

Here the framework moves from seeing consumer data to acting on it. It will allow consumers to initiate payments, switch accounts and seamlessly move money between institutions.  

But here’s the catch: Phase 2 regulations aren’t drafted yet. And consultation is still to come. There’s a target to legislate write access by mid-2027, but currently no draft regulations. 

This presents an issue for the industry. Growth in successful Open Banking schemes, like the UK, is increasingly payments-led. Write access is where the value for financial institutions lives because it would change how Canadians move their money.  

Until Phase 2 has a defined launch date, the most compelling and lucrative use cases will remain theoretical. 

Learning lessons

The idea behind Canada’s draft regulations is clear: growth through competition. The government believes that spending an estimated $457.7 million on compliance could bring $13.2bn to the economy in around 10 years.  (These benefits are largely borrowed from UK data, while the costs are modelled on Canada’s rules.) 

Large incumbent banks will share access to consumer-consented data, giving fintechs and PSPs the ability to compete with their own products on that data. 

It’s the model that’s seen the UK become the global leader in Open Banking. There were 16.5 million user connections in 2025, with API calls totalling 24 billion.  

The success of the UK’s model is through facilitating payments. Open Banking payments increased by 57% to 351 million in 2025 and payment initiation growth has outstripped data-sharing growth. 

Phase 1 in Canada doesn’t include payment initiation. But neither did the UK when it launched Open Banking. Canada may be launching legislation later and with narrower scope than the UK, but it does get to replicate the best bits without the early teething problems.    

The missing ingredients

Despite the genuine strengths of the framework – government legislated, single API standard, BoC supervision, and free for consumers – there are some key issues that need resolving.  

1. No payment initiation in phase 1

Canada’s legislation needs to make payments easier and cheaper – which is missing from the first phase of the framework. Other successful models, like in the UK or EU, enable seamless account-to-account payments, or VRPs (variable recurring payments) for credit card or utility bills, which won’t be possible until Phase 2.  

2. Indefinite timelines

Without setting hard deadlines for the new framework or screen scraping ban, there’s a risk that the scheme loses momentum.  

Banks and consumers need an incentive to migrate payments onto new rails. A definitive line in the sand forcing the ~9 million customers currently using screen scraping to switch over would be a suitable catalyst.  

3. No clear commercial model

Mandatory free data sharing is great for consumers but gives banks little incentive to build strong APIs. It also offers no sustainable revenue model for fintechs. The fee structure means that incumbents subsidize a system that benefits their competitors, which has slowed down progress in other countries.  

Canada’s not alone in this. Despite the UK’s success, the industry is still wrestling with commercial incentives. The next phase of growth for the UK’s Open Banking model depends on trust, usability and figuring out the sustainable commercial models.  

Canada’s new framework is still hasn’t addressed the issue of monetization.  

4. Optimistic revenue projections 

The $13.2bn in projected net economic value includes a lot of assumptions based on UK figures. Uptake, banking concentration, and product mix are each different across the two countries. Given the read-only launch of Phase 1, the assumed 27% (~9 million consumers) participation rate is quite optimistic.  

5. Consumer protection issues

Phase 1 doesn’t have a digital identification layer. When a consumer grants access to their data, they’ll be transferred back to their bank’s portal for authentication. This isn’t great for user experience but is ultimately safe.  

In Phase 2, this gap could create a fraud or liability risk. This is when a third-party can initiate payments or switch accounts on a customer’s behalf. Here, the authentication process needs to confirm the consumer’s ID and that they genuinely authorized this action. The framework requires strong authentication process.

6. Building consumer awareness

The adoption campaign is currently thin on the ground. A lesson from the UK and Australia’s launch: you need to actively build support. The UK’s FCA has even noted that the lack of a single brand is harming Open Banking’s success. The same could well be true for Canada. 

Who actually benefits?

Realistically, the benefits won’t be evenly distributed:

Fintechs and data-aggregator PSPs

These institutions are the early winners. They get legitimacy, a free and standardized data feed, and, if already RPAA-registered, a streamlined path to accreditation. Data sharing is mandatory and free, so favours them by design. 

Consumers

They’ll benefit indirectly and over time; taking advantage of increased competition, safer sharing, and eventually better products. But in Phase 1 (read-only, no payments) consumers won’t see a significant immediate change to their day-to-day banking.  

Small FIs and credit unions

These institutions can opt in to compete with the large banks using the same rails but will need to take on the cost and effort of accreditation and building APIs.  

Large mandated banks

These banks fund much of the system – assessment fees are tiered by asset size, so they pay the most – and must also give away data access. So they’re bearing the cost and competitive risk. The upside for them is defensive: they can also consume others’ data and avoid the reputational/security risk of screen scraping. 

A cautionary tale

Australia’s Open Banking journey offers a blueprint for how not to launch a new scheme.  

The Consumer Data Right (CDR) was launched to consumers in 2020. The idea was to enable consumers to share their data, compare products and services, then easily switch providers. It didn’t go to plan. 

Among the teething problems was inaction on screen scraping. Phasing it out was tied to CDR becoming a “viable alternative” with no concrete date attached. It led to years of delays and pushback from fintechs – with cheap, easy access to consumer accounts there was no incentive to build CDR-compliant integrations.  

By 2023, after the industry invested over 1.5bn AUD to launch the system, only 0.3% of bank customers were active users. There were a number of issues, mainly around data sharing and quality as well as consent renewals.  

Poor execution. High costs. Few clear use cases. It all added up to the government ordering a formal reset.  

These are real-world examples of how not to launch Open Banking. Without a killer use case, a top-down, regulator–driven model can be an expensive project that leaves consumers underwhelmed and PSPs disengaged.  

What will it take for Canada to succeed? 

Canada’s Open Banking framework is well-built, but it must work to encourage industry and consumer adoption. That means learning from others’ mistakes in areas like security, governance and consumer protection.  

The missing commercial model does little to encourage incumbent banks to build systems which only benefit their competitors. Without payment initiation in Phase 1 and a clear deadline to end screen scraping, it risks repeating Australia’s mistakes.  

The full Phase 1 rules are intended to come into force into force within a year of final publication — realistically 2027 at the earliest — and Phase 2 has no definite date yet. Until then, Canadians keep using what already exists: screen scraping-based aggregators, legal precisely because the ban is deferred, alongside Interac e-Transfer and individual bank apps. 

Every month the framework slips, the status quo it was built to replace digs in a little deeper. 

As the saying goes, those who don’t learn from history are doomed to repeat it.

Want to know more about Open Banking?

With the right preparation, Open Banking can turn a compliance cost into a revenue stream. Banks can build premium APIs, working with existing infrastructure to build products and services to connect other institutions, businesses and customers. Phase 2 may seem like a distant concept, but once it comes into force you’ll perfectly placed to take advantage.

If you want to know more about Open Banking, speak to RedCompass Labs. Our experts have helped banks across Europe get to grips with the latest legislation. Reach out today.