Canada is now the only G7 nation without a legislative open‐banking framework and small and medium-sized businesses are missing out as a result.
What is open banking? It’s a system in which banks share customer‐authorized financial data with accredited third parties via secure application programming interfaces (APIs). For business clients, particularly small and medium‐sized enterprises (SMEs), this model promises seamless integration of banking data with accounting, lending and payroll platforms, real‑time cash‐flow visibility and enhanced competition among financial service providers.
The Department of Finance initiated its first advisory committee on data sharing in 2017, yet Canada remains the only G7 nation without a legislative open‐banking framework. In the 2024 Fall Economic Statement, the federal government set a target for an early 2026 rollout. In the meantime, most SMEs endure manual collection of years‑old statements across multiple portals, inefficient loan applications and elevated fees — precisely the inefficiencies open banking is designed to eliminate.
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What would open banking mean for the average business? There are many benefits, including automated data feeds, where accredited providers retrieve each cleared transaction automatically, eliminating manual imports and ambiguous labels. This reduces bookkeeping time and errors.
There would also be enhanced security and control, since, rather than sharing login credentials, businesses grant and revoke data access through secure tokens. Accredited third parties must adhere to stringent data‐protection standards, ensuring that financial information remains confidential.
Real‐time cash‐flow visibility would mean instant access to current account balances and transaction details, thereby enabling proactive cash‐flow management and facilitating timely payroll, supplier negotiations and strategic planning.
At present, five large institutions dominate Canada’s banking market. Open banking would allow SMEs to compare rates, switch credit facilities and migrate accounts without administrative burdens, thereby driving fees and interest rates downward. This allows the new era of fintech to be part of the conversation.
Finally, with guaranteed, API‑driven payment confirmations, businesses receive funds immediately rather than waiting for cheques or electronic clearances and can reduce exposure to chargebacks and non‑sufficient funds events.
Since 2018, the United Kingdom has operated a mature open‐banking regime. Data indicate that SMEs in the U.K. have reduced monthly reconciliation efforts by approximately 22 per cent and secured financing in hours instead of weeks. By adopting similar standards, Canadian SMEs stand to regain hundreds of hours per year currently lost to banking administration.
According to EY, 74 per cent of Canadian SMEs would share more financial data if it meant better, more personalized services, demonstrating clear demand for open‑banking‑powered tools.
Canadian businesses would be wise to prepare for open banking. They should evaluate which institutions pilot open‑banking APIs and be ready to transfer deposits or credit lines to those offering true data portability. They should also conduct an audit of bookkeeping and lending processes and engage with accountants and software vendors to participate in any early pilot programs.
They can also join the OpenSME Initiative, a coast‑to‑coast coalition of small businesses, fintechs and SME advocates working to ensure open banking delivers real benefits for Canadian entrepreneurs. Visit opensme.ca for more information.
Open banking is poised to become a reality in early 2026, but only if regulatory momentum outpaces resistance from incumbent banks. Adopting open banking will free Canadian SMEs from burdensome data‑collection practices, reduce costs and unlock new avenues for growth.
Eric Saumure, CPA, CA, is a principal at Ottawa-based Zenbooks.
