January 4, 2021 by Greg Meckbach
If Canada proceeds with so-called “consumer-directed finance,” technology firms could potentially get access to consumers’ insurance data, a Microsoft Canada expert told brokers during a recent webinar.
The federal finance department appointed its Advisory Committee on Open Banking in 2018. The committee recommended in a January 2020 report that the federal government promote what it calls consumer-directed finance.
“Canada has chosen the term ‘consumer-directed finance’ for a reason, because it really articulates the fact that the consumer is going to be at the forefront of decisions,” said Don Klingspon, director of financial services for Microsoft Canada, during a webinar held Dec. 16, 2020, by Reuters Events.
“What it will mean, though, is the government will be telling banks and insurers whether or not to allow ownership of access to data for consumers. This would mean that insurers would have access to banking data, but fintechs would also have access to insurance data, so there is going to be a very strange and new opportunity to modify strategies,” Klingspon said during the webinar, Insurance in the Digital Age-The Future of Agents and Brokers.
“Consumer-directed finance more broadly encompasses financial products and financial data, and is not limited to banking,” Fasken lawyers Koker Christensen and Kathleen E. Butterfield wrote in an earlier blog post.
With the January 2020 release of the Advisory Committee on Open Banking report, the federal government announced a second phase of work. This second phase would examine the merits of open banking with a particular focus on data security, Christensen and Butterfield wrote.
Banking software vendor Portfolio+ Inc. explains on its website how consumer-directed finance would work.
“Once consumers authorize access to their data—either through an app or an online service—their third-party providers leverage secure online channels called application programming interfaces (APIs) to access financial data stored at financial institutions. These third-party providers can then use that data for creative and innovative new services and products focused on helping consumers better manage their personal finances,” wrote Stouffville, Ont.-based Portfolio+.
Open banking could allow financial service vendors to get a “holistic view” of their clients, including the distribution channels from which they typically buy, said Houston Cheng, actuary and senior manager at KPMG Canada, during his firm’s 2019 insurance conference.
With open banking, a person could give a fintech permission to look at a dashboard and view the information on their home and auto insurance, life insurance, investments, and their brokerage account for their registered retirement savings plans, said Justin Ferrabee, chief operating officer of Payments Canada, in an earlier interview with Canadian Underwriter.
Feature image via iStock.com/5432action