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Open banking to 'increase competition in the market,' provide choice: industry players

The Canadian government's recent budget announcement regarding open banking has garnered positive reactions from industry insiders, who believe it could inject much-needed competition into the country's lending sector. Open banking, also known as consumer-driven finance, is set to enable consumers to securely share financial data across various institutions and applications, opening up a plethora of options for services such as loans and budget management.

Mahima Poddar, the group head of personal banking at EQ Bank, emphasized the potential benefits of open banking, highlighting increased competition and innovation in the market. She stressed that breaking data constraints would empower customers with greater autonomy in choosing financial providers without the hassle of switching pain.

Under the proposed measures, the Financial Consumer Agency of Canada (FCAC) will oversee and enforce the open banking framework, building upon previous announcements aimed at establishing such a system in Canada. Poddar noted EQ Bank's longstanding advocacy for open banking, echoing sentiments shared by Hanna Zaidi, the VP of payments strategy at Wealthsimple.

Zaidi underscored the transformative nature of open banking, emphasizing that it grants individuals control over their financial information, a departure from the current model where banks retain ownership. She highlighted the inconvenience faced by consumers when switching banks or applying for financial products due to data silos.

Furthermore, open banking is poised to benefit small businesses by providing them with improved access to credit, vital for their growth and success. However, Zaidi cautioned that the effectiveness of the framework would hinge on meticulous planning and execution, urging the government to outline clear timelines and technical standards for implementation.

Ultimately, while the prospects of open banking are promising, stakeholders remain cautious, mindful of the intricate details that will determine its success in fostering competition, innovation, and consumer empowerment in Canada's financial landscape.

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