Canada’s housing crisis needs solutions — open banking will be a game-changer.
Adopting an open banking system could serve as a cornerstone for developing new financial strategies to address this challenge by retooling the Canadian financial landscape along the lines of other developed economies, creating tailored financial products, and ultimately helping make housing more accessible for all Canadians.
The Canadian government announced on December 16th, amid the turmoil of Finance Minister Chrystia Freeland stepping down, a path forward and timeline for the framework for open banking, aimed at securely transacting and sharing financial information of Canadians and small businesses. This initiative, highlighted again alongside the 2024 Fall Economic Statement, is set to launch in early 2026, with a review planned after three years to ensure that policy objectives are met.
Open banking refers to a system where customers can seamlessly and securely digitally share financial data with third-party providers through digital channels. Open banking powers new ways for consumers and businesses to access a wide range of financial services. This allows for better access and control over one’s financial information, enables all sizes of financial institutions to develop more personalized products and services, and creates a better overall experience for Canadians.
For use case examples, this can extend into rental products and payments, simplified tenant screening, and mortgage and insurance products, all while giving consumers greater control over their data and wider access to products.
The case for an open banking system is not a novel concept and has traction in other countries, including Germany and the UK. But as the Canadian federal government slowrolls solutions, the opportunity costs increase, and new solutions will take longer to develop. Canada can’t afford to wait; the urgency for housing solutions should further stimulate the drive for adoption.
Housing prices have skyrocketed across Canada. Demand increases are compounded by a lack of supply and higher mortgage rates, leading to a well documented affordability crisis where many individuals and families struggle to find affordable housing options. The government has introduced measures such as the First-Time Home Buyer Incentive and the National Housing Strategy, but these solutions alone are not sufficient to address the magnitude of the issue.
Earlier in my career, I was fortunate to be in the sector and the country where open banking was adopted—first in the UK, and later in Germany. During my time working in London, the UK introduced an open banking framework in 2015. Germany followed in 2017, by which point I had relocated to Berlin.
By 2023, there were seven million users of open banking products in the UK. I was in London during the rise of neobanks like Starling and Monzo, now multi-billion dollar companies serving millions of customers. Later, in Germany, I witnessed the adoption of their instant payment scheme in 2017, which fuelled the success of banks like Solaris and Fintechs such as n26. By 2023, Germany processed 1.5 billion real-time transactions.
Building this foundation requires time—for capital to flow and adoption to take hold. These countries are further ahead to rapidly deliver housing solutions, which is already underway.
I saw what can be achieved quickly, at scale, and with significant impact when there’s a supportive framework in place. Open banking is not only possible in Canada—it is hopefully on the horizon, especially now with more promises from Ottawa next to the 2024 Fall Economic Statement to establish this long overdue system.
Recently, the Canadian Bankers Association called on Canada to adopt a strategy that would unlock prosperity and build a robust economic base. Among the calls to action is the creation of a consumer-focused banking system unique to Canada, which safeguards personal data and boosts competition. Additionally, we need regulations that support growth and innovation without getting in the way. Open banking can achieve this.
While there is plenty of anecdotal information, data and case studies on the impact of open banking on industries like real estate are hard to come by. With Canada moving toward an open banking system, the potential for growth here remains massive—but much of it is still unknown.
What is known is that by adopting an open banking system, new innovative solutions can be created to help alleviate the housing affordability crisis. For example, financial institutions using permissioned financial data to analyze spending habits and offer tailored mortgage or rental products with simplified payments.
Open banking can also facilitate the development of new affordable housing financing models. With access to comprehensive financial data, lenders can better assess an individual’s creditworthiness and create more flexible lending options for those struggling to qualify for traditional mortgages.
Additionally, open banking promotes safety, security and transparency in the real estate market by allowing potential homebuyers to easily compare prices and mortgage rates from different lenders in a high assurance environment.
Open banking isn’t just for homebuyers—it’s a game-changer for renters too. By enabling rent reporting, Canadian renters can build positive credit history, just like homeowners do with mortgage payments—an idea even Prime Minister Justin Trudeau has championed. It also streamlines rental registry processes through financial data sharing. In addition, strata associations can adopt this as a cost-effective alternative to traditional card payments, improving convenience, promoting financial inclusion, streamlining operations, and boosting data security.
It will be important for regulators to establish guidelines and protocols to protect individuals’ data from potential breaches. This will dampen any concerns about the security and privacy of personal financial data in open banking.
Overall, with the implementation of an open banking framework, not only can we drive growth and spur innovation in Canada, we can set the foundation for access to affordable housing options and a more transparent real estate market, ultimately benefiting individuals looking to purchase a home.
James Innis leads operational and capital market strategies at Sutton Group, shaping the company’s growth and focus on technology-driven real estate services. Sutton Group aims to revolutionize Canadian real estate management, fostering growth for its agents and enhancing the customer experience with innovative solutions.
With over ten years of global experience, Innis’ operational and transactional expertise has been vital in securing transactions worth over $300 million with leading technology companies and investment funds across North America and Europe. His recent role as Managing Director at R-LABS Canada involved developing the platform into one of the first global real estate technology-focused venture builders.
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