While it offers the prospect of increased competition, the good news for Canada’s largest banks is they’re already trusted custodians of customer data with strong brands that they can take advantage of to position themselves for success in an open banking framework. The opportunity will be to develop a clear vision of what role they want to play so they can continue to meet customers’ changing expectations.

For smaller and mid-sized banks, open banking represents a significant opportunity for them to attract new customers as they take advantage of the data made available by their larger counterparts to reach new markets. On the other hand, including them in a data-sharing regime could impose significant costs on them, which is why open banking in other jurisdictions has tended to focus on larger banks at the initial stages.

Successful banks will have a number of characteristics, such as a customer-centred focus aimed at creating personalized solutions to win the hearts and minds of their customers. An important part of that will be mastering their analytics capabilities so they can use the insights available to offer the right suite of products and services to customers at the right time.

Banks will also need to differentiate themselves through smart use of data. The challenge will be to get their data sets in order so they can make information available on request. A foundational step for open banking is undergoing a data-mapping exercise to see where customer data is housed across systems so they can respond to customer requests and requirements for access and changes to, as well as deletion of, their own data in light of privacy requirements.

For the banks, the idea of sharing data may be uncomfortable, but it’s important to remember that open banking offers them many opportunities and benefits. Besides tapping into new innovations, the efficiencies created by open banking can help the banks reduce costs. Open banking also has the potential to reduce other risks faced by big banks, such as fraud and money laundering, as the increased access to and sharing of data among institutions will make it easier to spot anomalies.