You may have heard of a new wave of banking apps claiming that they can use ‘open banking’ to help you manage your finances or get better deals on services. But what exactly is open banking?
Open banking, also known as consumer-driven banking, is the regulatory framework that gives individuals control and ownership of their financial history. Under open banking, third-party providers like budgeting apps or lenders can access your basic banking data, but only with your express permission.
This allows you to securely use apps and services that help manage your money, compare financial products or make payments easily.
In Canada, open banking isn’t fully operational yet, but the federal government passed the Consumer-Driven Banking Act in June 2024 to establish a legal framework. The government plans to launch the first phase of this framework in early 2026.
That said, Canadians are already sharing their financial information with third-party banking and budgeting apps that rely on less secure data-sharing methods like screen-scraping. This requires apps or services to access your banking data with your username and password and “scrape” the information displayed on your account statement.
Regulated and secure application programming interfaces (APIs) will replace this method, but Canada is still behind countries like the UK and Australia when it comes to embracing the future of digital finance.
Open banking apps and websites have a number of uses, including:
Obviously, these apps also need to make money, and they mostly do this through advertising. Open banking apps usually use your spending data to target advertisements for banking services that you might be interested in.
Theoretically, this means the adverts you get will be for things you might actually want, and the data is processed by the app rather than sold to those advertising, but some people still prefer to keep their data as far away as possible from advertisers.
Open banking apps can also make money by charging subscription or transaction fees.
Open banking apps only have access to your banking data, such as transactions and direct debits (basically, whatever appears on your statements), and not anything personal that your bank might know about your financial or living situation.
The Consumer-Driven Banking Act states that open banking apps have to use APIs to access your data (see the section on APIs below). This is the most secure way of sharing your data and ensures that only the data you give permission for can be shared.
APIs are used to let you securely share data between sites or apps on the internet. For example, providers like Skip the Dishes or Uber Eats use APIs to access your location through Google Maps.
APIs allow one company to access specific data that another company has, without needing to share your passwords with anyone. Before this can happen, you’ll be asked for your permission, and you should always check exactly what you’re giving permission for.
The government has stated that Canada’s open banking framework will feature an accreditation process and a publicly accessible registry to help consumers identify trusted service providers. This registry will be overseen by the Financial Consumer Agency of Canada (FCAC), listing entities that have met specific criteria and adhere to ongoing reporting requirements.
So before you consent to share your financial data with any app or service, make sure it appears on the official registry of accredited providers when it’s available. And never share your banking passwords — no open banking services will ask for them as they use secure APIs to access your information.
Although open banking has not officially debuted in Canada yet, there are some solid digital banking options that offer low fees and, hopefully, an easy transition to open banking when it arrives. Check out some top options below.
Canada is in the process of launching its official open banking framework, with key legislation already in place and rollout expected to begin in early 2026. Once implemented, Canadians will be able to securely share their banking data with trusted apps and services.
Until then, you can check out budgeting apps like Emma to help you visualize and manage your money.
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