Open Banking is Changing Privacy Laws Around the Globe
Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
Open Banking is Coming to Canada…Are you Ready for Change?
EY Canada | Jessica Hansen and Sam Nazari | Apr 4, 2022
Open Banking is Changing Privacy Laws Around the Globe
Implementation of open banking in a number of jurisdictions — for example, Australia (the Customer Data Right), the UK (Open Banking Implementation Entity, 2018), Europe (Payments Services Directive II(PSD2)), Brazil (Regulation on Open Banking) and India (Unified Payments Interface, 2016) — has shown promises of immense value delivered to all kinds of clients.
See: Open Banking Surpasses 5 million User Milestone in the UK
As more and more consumers continue to shift their expectation to access flexible, alternative, and personalized products and services, businesses are being forced to think more innovatively to meet these expectations. Customers’ demand to take ownership of their data has led to a move where they will provide consent around the sharing of their data, with an expectation of then receiving improved products and services, while the organization still ensures the security of the personal information.
In August 2021, the Advisory Committee on Open Banking published its final report recommending that Phase 1, including design and implementation, of open banking in Canada be established by January 2023. In March 2022, the Government of Canada officially announced the open banking lead with a mandate to develop a "made-in-Canada" regime based on the final report's recommendations.
Risk management and privacy considerations
Consent management and the right to be forgotten: Any sharing of information across entities via APIs will require explicit consent from the data subject.
Data management: Identification, classification, protection, retention and destruction of client records should be agreed between the data controller and data processor in the organization and/or any third party engaged in any capacity through the data’s lifecycle. The need to align with regulatory requirements should be kept front and centre when developing policies governing the classification, level of protection, retention and destruction of client records.
See:
Know Your Customer – and your Obligations – in the age of Real-Time Rails and Open Banking
Tink Survey Report 2021: Open banking spending, investments and use cases
Security risk: process to deal with data breaches or incidents will also be a factor. In a world where the protection of IT systems has become mandatory and fundamental for every kind of business, it is important to be prepared to face cyberattacks in the most cost-effective way.
Business risk: As the post-pandemic industry takes shape, consumer expectations are changing. Increased use of technology and the ready availability of information means that consumers’ knowledge around their rights, privacy and data use is growing.
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