How Open Banking can help you make better banking decisions
Imagine opening your banking app and discovering you could be earning more on your RSP. Pretty easy to imagine, right? Now, imagine taking advantage of those higher earnings without complicated paperwork, wait times and follow ups. That’s just one example of a world with open banking. Open banking has already been embraced by Europe, the U.K., Singapore, Australia, and many others. With the need for digital innovation already at the forefront of the financial sector, it is only a matter of time before open banking comes to Canada as well.
What is open banking?
Open banking isn’t really a ‘thing’, so much as it’s an approach. With open banking, the financial tools, infrastructure and institutions are better integrated to provide a safe and secure way of ensuring Canadians have access to better banking. Wondering what we mean by ‘better banking’? In its simplest form, it means you’ll have more choices available to you, resulting in better financial decisions. With open banking, you’ll have access to a clear picture of everything going on with your finances across the board, without logging into and keeping track of multiple platforms. In addition, when you find that better product, service or rate, open banking will eliminate the arduous process associated with moving funds to another Financial Institution (FI) or investment vehicle. Not only that, applying for new products and services could become smoother as well, with the ability to share your full financial picture and personal info with a new FI in a snap.
Everything you need, all in one place
Think about your current financial portfolio. You likely have one or two chequing accounts, a joint account for shared payments, a high-interest savings account, a couple of credit cards, a mortgage, some registered investments ( RSP & TFSA) and maybe a car loan. Now, what are the chances each of these is with the same FI? As you made your financial decisions, the likelihood is you went with the best product for you, resulting in accounts with a variety of FIs. The more products you have at various locations, the more complex it may become to keep information at your fingertips. (Think about the headache of ensuring you have all the documentation you need for tax time.) As life progresses, your financial needs may become more complex (RESPs, aging parents, estate planning, etc.) and the more difficult it becomes to keep track of things. Open banking could enable the creation of a dashboard or hub platform where you could see a complete overview of not only your finances, but associated documentation.
Is open banking safe?
The implementation of open banking involves legislation at the federal level, ensuring a high level of security, and a clear privacy mandate for its users. These conversations and planning processes are well underway, and Canada has just appointed an Open Banking Lead to oversee the complex process.
Empowering you to make better financial decisions
A long and complicated process is a consistent obstacle that prevents many Canadians from finding better banking solutions. With easy access to a multitude of options in one place, open banking can empower you to make better banking decisions. Currently, in order to take advantage of a higher return or lower cost on a registered account like an RSP or TFSA, we’re often faced with approaching our current FI to initiate the transfer, wait for a paper cheque (remember those?) to be sent to the new FI, potentially follow up several times, wait, wait, and wait some more. Open banking would help eliminate this unnecessary friction, allowing you to save more and earn more with a tap of a few buttons.
Ready to learn more about open banking? Check out our resource hub on equitablebank.ca.