In this episode, we’ll be taking a closer look at the recent open banking developments in Canada with Alex Vronces, the Executive Director at Fintechs Canada. We explore the recent policy announcements, the implications for consumers and businesses, and the pivotal role technology and regulatory frameworks play in reshaping the financial landscape.

The Simplify Payments Podcast, presented by Paramount Commerce, is a podcast series that takes a closer look at new and emerging financial technologies and practices with some amazing industry experts.

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Full episode transcript:

Varad Mehta: Hello everyone, and welcome to Simplify Payments, a new podcast series presented by Paramount Commerce. I’m your host, Varad Mehta, and in Simplify Payments, we explore new and emerging financial technologies and practices with some amazing industry experts. In our third episode, we’ll be taking a closer look at the recent open banking developments in Canada. Our guest today is Alex Vronces, Executive Director at Fintechs Canada. Please sit back and enjoy the show. Alex, as you know, we always begin with a few fun questions, so I have three lined up for you once again. The first one is, you recently spoke at the House of Commons of Canada in front of the Standing Committee of Finance or on Finance. You represented Fintechs Canada. How would the Alex who graduated with distinction in journalism and economics back in 2016, feel about that specific moment?

Alex Vronces: Oh, it’s a tough one. I’m not sure he’d feel much about it, quite frankly. I think he’d hear about it and he’d be like, Cool.

VM: Oh really? This is another day at work sort-of thing.

AV: Well, I’ve always been interested in public policy. And whether I’m talking about it in front of elected officials on a House of Commons committee or my wife, who I often bore, it feels the same. The dopamine hit, there’s no difference between the two. Both are fun.

VM: Okay, so there you go. It’s just normal. For other people it would be a little bit more tough or it would be like a crazy milestone, but I like that. I respect that.

AV: You know what it’s like? It’s like, I’m sure you have something that you’re obsessive about, and it probably doesn’t matter who you’re talking to about it, it feels just as fun and pleasurable and interesting. That’s how I feel about this stuff.

VM: Okay, cool. I can respect that. My second question is, according to you, what is the most overplayed Christmas song? And should there be a cap on how many times you can play that specific song?

AV: That’s a tough one. If I answer truthfully, my wife might kill me because she loves Christmas music and she plays it quite early in this house. I might have to say no comment on that one. Just in case she sees this.

VM: And my last question is, what is your one tip on being a really good public speaker? Because I see you hold it down like really you’re a calm person. It doesn’t seem like you have stage fright, but for those normal people like us, what is one tip you would give to be an absolute amazing public speaker?

AV: Oh, man. Can I swear on this podcast or no?

VM: Go for it.

AV: I think the thing that helps me is just know your shit. If you know your shit, nothing will surprise you. You’ll be prepared for everything. You’ll be able to roll with any punch. I think the other thing is maybe recognising that everyone gets nervous in those kinds of situations, and being nervous doesn’t really have a correlation with your performance. You can be really nervous and do well. If you’re nervous that doesn’t mean you’ll do poorly. That often helps me manage nerves. But it takes, I think, a bit of practise and exposure to those kinds of situations to have those revelations.

VM: Okay, so be prepared is Alex’s tip. If I can just squeeze one more…

AV: Not so much be prepared. Know your shit. It’s different from being prepared. You can prepare for every possible scenario. Well, no, you probably can’t prepare for every possible scenario. You’ll miss some. But if you know your shit, you can go off the cuff and still sound like you know what you’re talking about because perhaps you do.

VM: Okay, cool. I like that. Now, going into the topic of discussion, we’re obviously here after the fall economic statement came out from the government of Canada. We want to talk a little bit about consumer-driven banking and get your thoughts on this. First of all, can you just give your thought on the name change, consumer-driven banking? It’s switched from open banking. Do you think this is a better name? Do you think the public will be more open when they hear this term?

AV: I think a few things. I think the intent behind the name change is the right one. The word open banking sends some people running, which is not a surprise when you consider what a bank is to most of us. It’s this safe place for our money, like the bank vault. People want it locked and closed and secure. Opening it up doesn’t sound very safe and secure. It sounds scary. It sounds like it puts me at risk I think when you unpack the term and explain to people what it actually means, it calms them down. But there are plenty who hear the word, come to their own conclusion, and never revisit it again. So I think rebranding open banking is probably for the best. That said, it’s still called open banking around the world. I’ve been in situations where I’ve tried to refer to it as consumer-directed banking or consumer-driven banking, and the person I’m talking to just keeps referring to it as open banking. I’m not sure the new term will stick, but A for effort.

VM: Okay, I like that one. Now, next, I would like to know what you felt about the fall economic statement containing this passage about consumer-driven banking or open banking, as we traditionally call it. Can you just briefly break down what it contains and just your thoughts and feelings about that?

AV: I think it’s definitely a step in the right direction. One thing I don’t think many appreciate is that the government did literally the most it could do this year on consumer-driven banking. For that, I think the sector should be grateful and it should appreciate how hard the government worked to do what it did. I think the last time we spoke, we talked about how open banking is really a range of legislative measures, some of which are going to take longer to happen than others. There is no possible world in which the government snapped its fingers and implemented open banking in 2023. It was always going to be a longer-term move. It was always going to be something of a commitment. But the commitment that the government made was by far the most specific one it has ever made. If you look at the policy statement that they released along with the FES (Fall Economic Statement). They said that they’re going to mandate a government-led entity to oversee the system. This is very important. The market-driven approach in Canada has not worked well because it hasn’t resulted in the market coming together and finding out a safe and secure way for Canadians to share their financial information. The government said it would define which entities can participate, the scope of data and accounts. The government said that it would compel data holders to make data available in its unaltered original format, free of charge to Canadians. You can’t charge Canadians for them to access data that they should have control over. The government also said it would mandate the use of a single technical standard, which I think is also very helpful. You don’t want a standards war where some are using one and some are using another. The government said it would do all the things that open banking is around the world, and it said it would start by implementing or introducing legislation in the 2024 budget. For a while, it was a question mark whether the government was going to leave it to the market or use the law to make the market move. I think the government has made it very clear that it’s going to use the law. We are going to get a government-led approach, which is what we’ve seen in every jurisdiction where this has been remotely successful.

VM: Yeah, I respect that. There were also part of the fall economic statement, there were also mentioned that there was going to be amendments to the Canadian Payments Act to expand membership eligibility in Payments Canada. Can you describe the significance of this? Because even it was a little tough for me to understand, but what is the significance of this and especially for payment service providers.

AV: Payments Canada is this government-created entity that owns and operates our national payment systems. Whenever you pay with your debit card, pay a bill, get paid your salary, it ultimately goes through this system that Payments Canada owns and operates. Payments Canada started this programme a while ago to modernise its payment systems. It basically said it was going to blow them up and build them a new and then build this third one called the Real-Time Rail. The Real-Time Rail will be when it’s finally built and launched Canada’s first real-time end-to-end payment system. In other countries that have built these kinds of payment systems, they’ve given non-banks like fintech companies access to the payment system so they can move money around on behalf of their customers. And it’s resulted in a range of good things. We have a member, Wise, that has been quite public about the fact that when it got access to the UK’s faster payment system, it was immediately able to cut cost by 20 % and increase the speed of money movement to seconds. This obviously has benefits for a wide range of Canadians, whether it’s a consumer or a business. And so in order to bring that world about a line in a piece of legislation called the Canadian Payments Act had to be changed because only members of Payments Canada can access the system. So when the government says they’re going to amend the membership clause in the Canadian Payments Act, what they’re saying is they’re going to allow regulated payment service providers companies like Wise to access Payments Canada’s Real-Time Rail when it’s finally built. The benefits will come to fruition when that real-time rail is built. My understanding is that Payments Canada is working with its members to figure out what the new way forward looks like in light of all the past delays. My understanding is we should have a better sense of when that system is going to be built this January.

VM: Interesting. We spoke about this at the beginning, but Fintechs Canada and you have been working really hard together. You spoke at the House of Commons. There was the Choose More campaign that was part of Fintechs Canada. Could you talk about the work you and the Fintechs Canada team and the partners have been doing to push this conversation forward? Because as we spoke about earlier, this year has been like work, work, work all time when it comes to open banking, there have been so many conversations. And finally, for this to happen on a federal level, it’s a big achievement. Could you just talk about how much work you, the Fintechs Canada team, and the partners have been doing prior to this announcement?

AV: It always feels like too much work, doesn’t it? It feels like it should have been easier than it was, but people put in a lot of time, a lot of energy, a lot of resources. This announcement was big, but it’s taken, from one perspective, five years to get here. The government started consulting on this in 2019, and Canada’s Fintech community has been at the table from the beginning, answering question after question, providing perspective after perspective, writing op-ed after op-ed, launching campaign after campaign. It’s been a lot of work. It’s hard to quantify. I think it’s hard to quantify because I don’t want to quantify it. I would hate to see how many human hours it’s taken to get this done, but I’m glad to see progress has been made I think a few things happened this year that made a bit of a difference. One is that the climate was such that the government couldn’t spend a lot of money and had to find things to do in that fall economic statement to make life more affordable for Canadians. So the climate was such that our policy priorities were conducive to being put on the agenda. I can imagine a radically different world where the government had a lot of money to spend and maybe all of these things would have been crowded out by shiny new programmes. That obviously helped. I think the Choose More campaign that we and our members launched helped. Thousands of Canadians signed up and thousands and thousands of Canadians sent emails to their government telling them how important financial sector reform was and how it was important to use the financial sector, among others, to make life more affordable in Canada. I think the US proposing its open banking rule, the CFPB, that helped a great deal. The US is a big trading partner. It’s important for us to harmonise with them where it makes sense. I don’t think this would have happened had the stars not aligned. That doesn’t mean it’s totally outside of our control. I think the sector did a good job identifying when the stars aligned and then moving really fast and very decisively when the stars did align. But the TLDR is a lot of work. A lot of persistence led to this.

VM: Yeah, I’m not going to talk about the countless op-eds or articles or the endless amounts of campaigns that you run. But yeah, we’ll just sum it up: it took five years. Hard work for five years. That number is still quite significant when you think about it.

AV: That’s just from us. I think some of the unsung heroes are the government. The Department of Finance has been working on this for some time. Canada’s Open Banking Lead, Abraham (Tachjian), he’s been working on this for some time. They’ve done a fantastic job. Have they listened to every concern industry has had and made things go their way? No, but they’ve been open, collaborative, and very reasonable partners in this. I think they deserve so much of the credit to.

VM: Shout out to them as well. You know something cool that actually happened before this fall economic statement, and we also wrote about it on Paramount Commerce as well, that Ontario’s government showed their support for some of these federal financial initiatives where it was like tackling financial crimes or supporting open banking or the Real-Time Rails. Could you share the significance behind this? Because that came at such an important time. It was just, I think, a couple of weeks prior to this announcement. Do you think it had any impact on…because I’m sure they’re working on it for a long time. But do you think that’s cool that a provincial government would speak up about this?

AV: Yes. When I think about the work that needs to happen to make a law change or get government, which is this big clunky institution to move, it takes the stars aligning for it to happen. It’s never a single letter. It’s never a single op-ed. There’s a sense that Canada can sometimes feel like it’s a country of many countries. The feds and the provinces have to work together on doing a lot. I think it definitely helped to have a province such as Ontario come out in favour of some of this stuff. It makes a lot of sense. There’s a big fintech scene in Ontario. From an economic development perspective, federal policy initiatives like this will help. It was great to see the Ontario government recognise that, and we hope they will continue to be a supportive partner along the way because a lot of work still does need to be done. The commitment came, but now we really need to implement.

VM: Finally, I would love to know, what should consumers and businesses expect as consumer-driven banking or the open banking framework is introduced? It’s not that far away. We’re expecting legislation next year and the following year we’ll see even a bigger explosion about this. What do you think Canadians and Canadian businesses can expect from this?

AV: My honest opinion is that at first, I don’t think they should expect much. I think at first it’s going to be a lot like the invention and innovation of computing, or it’s going to be a lot like the electrification of factories. It takes quite a bit of time for innovations like this to diffuse throughout society and really make their effects tangible and big. Same with the internet. When the internet first became a thing, you had folks like Paul Krugman saying things like, The effect of this is going to be no greater than the fax machine. How wrong was he? I think we’re going to see something similar with open banking. At first, a lot of the changes will be on the back end. Consumers probably won’t notice anything. The way they share their financial information, though, will be much safer, much more secure, much more reliable. But then 10, 20, 30 years down the road it’s hard to predict what the future will look like, but making it easier for people to share their information as inputs into the production of other kinds of services, it’s going to have an impact of some kind. It’s going to make it easier for folks to manage their finances, easier to meet their financial objectives. What form, however, it ultimately takes, I mean, it’s up to the entrepreneurs who are going to build products on the back of this.

VM: Love it. Alex, I want to thank you for your time. I don’t know if this is the correct way to say this, but I feel this Christmas there’s probably going to be too busy people in Canada. I probably feel Mariah Carey with her song All I Want for Christmas, and you singing the tune of consumer-driven banking or open banking are going to be the busiest people this Christmas season. I hope you can get some time off because I’m sure it’s been a busy time, but I always want to thank you. You’re so generous with all the information that you share and whatever you explain it so we can take it in so easily. Thank you, Alex. And I hope whoever listens to this can get more perspective about what’s to come with consumer-driven banking or open banking. Thank you so much again.

AV: Thanks for having me. One, I hope I’m not one of the top two busiest people in the country because that will spell disaster in ways that I can’t even predict. But Mariah Carey is definitely a contender for probably most overrated Christmas song. Maybe stuff by Michael Bublé too. I’ve heard his stuff in the department stores. But yeah, thanks for having me. I can’t wait to be back.

VM: I can’t believe Alex answered this question. I hope you don’t get into trouble for this, but thank you so much again, Alex. It means a lot. Thank you. That is our episode for today. I want to thank Alex Vronces, the Executive Director at FinTechs Canada, for explaining the progress the Canadian government has made on open banking. If you have any questions for us or Alex, please do comment them down below. Don’t forget to like, share, and subscribe to our YouTube channel for more interesting podcast episodes. Thank you so much for tuning into the Simplify Payments Podcast presented by Paramount Commerce. I’m your host, Varad Mehta. And I’ll see you soon.