Big banks back Canadian launch of Financial Data Exchange

Canada’s big five banks are among 31 organisations onboard for the launch of Financial Data Exchange (FDX) in the country, vowing to work together to promote Open Banking through the development of a secure, common, interoperable, flexible and royalty-free industry standard for financial data sharing.

Royal Bank of Canada, TD Bank, Tangerine Bank (Scotiabank), Bank of Montreal and CIBC are joined by a swath of smaller fintechs, aggregators, and credit card networks for the Canadian launch of FDX, which already operates in the US.

Canada is in the process of a lengthy Open Banking review. The Department of Finance Canada set up an Advisory Committee on the issue in 2018 to investigate whether the country should follow the UK in making it easier for people to let third party financial services providers access their banking data.

Recently, the latest stage – consulting stakeholders on standards to enhance data protection, examining issues such as governance, consumer control of personal data, privacy, and security – was put on ice because of the Covid-19 pandemic.

In the past, the Canadian Bankers Association has been wary of the idea of Open Banking, warning that giving third parties access to customer data could “give rise to contagion, reputational and other types of risks with broad-ranging consequences”.

In the US, where there is no UK-style government-directed initiative, the industry-led approach has made some progress, with the FDX API so far adopted by over 100 firms and rolled out to around 12 million people.

The steering level of the Canadian arm promises broad representation, with banks joined by financial data aggregators, fintechs, payment networks, consumer groups, financial industry groups and others.

Don Cardinal, MD, FDX, says: “The launch of FDX Canada proves the success of this industry-led initiative to bring leading organizations in the Canadian financial services ecosystem together around a common financial data sharing standard that will protect consumers and business and simplify their banking experiences.”