Open banking swings both ways for big banks on risks and opportunities: experts

As Canada continues to implement open banking, experts argue that the big banks could both face risks and seize opportunities from this change. Open banking, also known as consumer-driven banking, allows individuals and businesses to securely share their financial data among lenders. Mark Schofield, a managing director at Boston Consulting Group, explained that it enables Canadians with multiple accounts to view their entire financial picture on one convenient dashboard. Open banking aims to boost competition by making it easier to switch lenders.

However, the big banks, known as the Big Six, seem well-equipped to handle the changes. John Aiken, an analyst at Jefferies, believes that open banking will gradually erode market share but not immediately. He doesn't see significant concerns from investors about the big banks. Ottawa introduced open banking legislation in the 2024 federal budget, and the Department of Finance published proposed regulations in June, with a 60-day comment period.

The department estimates the implementation would cost $457.7 million over ten years, generating $13.2 billion in benefits.

Without a secure framework, around nine million Canadians currently share financial data through screen scraping, which exposes them to security and privacy risks. John Aiken said the big banks are adapting but are not fully ready for stage one. The cost of implementation could be a headwind, and there is a risk of longer-term disruption.

However, the banks could benefit by accessing information like customer investments held at other institutions, potentially convincing customers to bring their external investments in-house.

Canada's banking system is an oligopoly, giving large lenders significant power to adjust to the changes. Henry Kim, a professor at York University's Schulich School of Business, stated that the banks could buy out or replicate successful fintechs. Statistics Canada figures from Q4 2025 show the Big Six banks hold over 90% of all banking assets, giving them a strong position to adopt open banking technologies.

Ethan Teclu, a spokesperson for the Canadian Bankers Association, confirmed the banks' commitment to fostering innovation and competition in the financial sector responsibly.