Unlocking opportunities with open banking

Increased sharing of customer data increases the potential for data breaches or unauthorized access

You’ve likely heard someone refer to Open Banking, but what is it exactly?  Open banking (or open data or open finance) is set to arrive in Canada in 2023. Open banking refers to an innovative system that enables bank customers to share their personal financial data with selected third parties through secure application programming interfaces (APIs). This data sharing enables customers to have access to new and innovative financial products and services and facilitates better visibility across their fulsome financial portfolios. Open banking encourages product innovation, as it enables broad marketing of new offerings that cater to consumers’ specific needs. Additionally, banks can drive loyalty as they deliver enhanced customer experiences through more personalized and tailored offerings based on customer data insights. 

Consent underpins the overall framework: Account holders retain full control over their data, including how and when it’s used. Customers will have to opt-in and provide authorization for their banks to share their account and transactional level details with accredited third parties. Without open banking, there is no secure way to share data from your bank account with fintechs, other banks or entities other than your own bank.  Open banking has the potential to improve the customer experience through greater access to more tailored financial offerings. For business account holders, open banking can fuel enhanced enterprise resource planning through better cash flow management, expense tracking, invoicing, faster payments, etc. For financial institutions and fintechs, gaining access to broader customer data can help build innovative products better suited to meet consumers’ needs. 

To ensure all open banking participants comply with the open banking standards, a new set of regulations will be introduced by the Canadian government setting out the protocols, obligations, and requirements that all participants must adhere to.  

While open banking offers tremendous benefits in terms of convenience, innovation, and access to faster payments as outlined earlier, it also presents new challenges, particularly in the area of fraud. The increased sharing of customer data increases the potential for data breaches or unauthorized access, leading to fraudulent activities as criminals find new opportunities to exploit vulnerabilities and perpetrate fraud. 

By enabling third-party providers to access customer financial data, new fraud strategies are needed.  From fraud model tuning to customer education and awareness, and by closely monitoring transactions and account activities, financial institutions can swiftly detect and respond to fraudulent activities.  Open Banking enables faster and increased volumes of payments, which can impact a bank’s ability to conduct timely fraud detection and prevention. There is a need to review fraud models and scenarios with this increased risk lens. Additionally, effective use of shared data in open banking not only addresses potential fraudulent vulnerabilities but enables banks to improve their fraud detection capabilities by utilizing data sharing to get a better understanding of their customers based on their activities outside of the bank.   

How we can help

At Sionic, with our global presence, we have experience with Open banking implementations, and the work needed to address these fraud risks. Sionic can help banks deploy advanced fraud detection and prevention mechanisms specifically tailored to open banking environments. 

Open banking impacts many areas across the bank, from IT and architecture to cyber security, data, customer user experience, operations processing, fraud and risk and a host of other departments. 

Sionic has worked with many banks and financial institutions around the world that have been through this journey and have successfully adopted open banking. Sionic can bring this experience to help your organization identify areas impacted by open banking and advise on best practices to be ready for the changes ahead of regulatory deadlines. Find out how we can help here.

About the author

Emily Field


I have over 20 years of experience in the financial services industry, and have successfully built and led high performing teams in retail and business banking