Open Banking Cuts Both Ways for Canada's Big Banks, Experts Say

Canada's push toward open banking, a framework that lets consumers move their financial data between institutions, could slowly erode the market share of the country's biggest lenders while also handing them fresh opportunities, industry experts say.

Open banking, sometimes called consumer-driven banking, allows individuals and businesses to securely share their financial data across lenders. It aims to drive competition by making it easier to switch banks.

What the framework does

Mark Schofield, a managing director and senior partner at Boston Consulting Group, said many Canadians hold relationships with several financial institutions, banking with one firm, investing at another and holding an insurance policy elsewhere.

"In the most simple sense, open banking is the ability to securely share your financial data from multiple institutions so you can build a full picture of your own individual balance sheet, your own savings, investments, and ultimately see your financial situation (and) financial health," Schofield said.

In essence, it could let Canadians with accounts at different firms see their entire financial picture on one dashboard.

Ottawa's timeline and the numbers

After years of study, Ottawa got the ball rolling with legislation to implement open banking in the 2024 federal budget. In June, the Department of Finance published proposed regulations and held a 60-day comment period that ended in August.

The department estimates implementation would cost about $457.7 million over a 10-year period and is projected to generate $13.2 billion in benefits to consumers and businesses over that time. It said about nine million Canadians currently share financial data through screen scraping, a practice that exposes them to security and privacy risks.

Costs, disruption and the Big Six

John Aiken, an analyst at Jefferies, said the big bank incumbents are well positioned. "I don't view this as a looming tidal wave. It's something that could slowly erode market share, but it's not going to be immediate ... I'm not overly concerned about this, nor are we hearing broad concerns from investors," he said.

Aiken said the sense he gets from the big banks is that they are trying to adapt, but "none of them are fully up to speed, even on stage one, and nothing will happen until the Big Six are up and running." The cost of implementing open banking is already a headwind, he added, and there is a risk it becomes "very disruptive" over a longer period.

"The largest deposit holders immediately are probably not going to see that much disruption, but over time, 10, 15 years, we could see more significant erosion in terms of market share," Aiken said.

Still, banks could gain. Aiken said lenders would get access to information such as customer investments held at other institutions and could try to convince those customers to bring the money in-house. "The Canadian banks have far more data within their system that they are utilizing, I would argue quite well, (and) with extra information that'll be helpful," he said. "However, what open banking does is also provide that information to other players, and that is the perceived threat on the fintechs or the digital startups."

Concentration as a shield

Henry Kim, a professor at York University's Schulich School of Business, said Canada's banking system effectively being an oligopoly could help the large lenders adjust.

"With such a high concentration, the banks could sit back and say 'Well here's a fintech that's been doing well and buy them out or replicate that.' They have significant power already," Kim said.

As of the fourth quarter of 2025, Statistics Canada figures showed the Big Six banks held a more than 90 per cent share of all banking assets.

Kim is optimistic about the outcome. "Down the road when the dust settles and the ecosystem figures out how all these technologies work, I believe there will be an opportunity for consumers to actually have options and have choice," he said.

Consumers may wait until 2027

Steve Boms, executive director of the Financial Data and Technology Association, said in an interview after the 2026 Global Open Finance Summit last month that the earliest consumers could get access to open banking tools would be toward the end of 2027. The summit featured talks from Bank of Canada and Finance Department officials on implementing the framework.

In markets where open banking is further along, Boms said financial institutions were defensive at first, but that changed. "Over time, it became more of an offensive posture and by that I mean being able to interact with customer permission data in ways that delight customers, that provide them more options, more tools that can expand creditworthiness and access to affordable credit," he said.

He said lenders with the most resources to spend on tech development and marketing could stand to benefit. "The banks aren't just going to be the data providers; they're also going to be the recipients because the third party also has to share data with the customer's consent. So I actually think there's a lot to like from the Canadian banks' perspective," Boms said.

Ethan Teclu, a spokesperson for the Canadian Bankers Association, said in a statement that it is committed to fostering innovation and competition in Canada's financial sector in a responsible way. "As the voice of banks in Canada, the CBA has advocated and collaborated with our"