Experts urging feds to implement new banking policy to not ‘fall behind’ in trade war

As the trade war with the U.S. ramps up, business leaders are calling for an overhaul of the Canadian banking system.

A recent report from KPMG, a Canadian financial and tax service, found that while sweeping incentives around national infrastructure are the current platform for economic growth, two-thirds of leaders in national enterprises believe that open banking would be a stronger solution to driving commerce throughout the country.

Open banking, according to the federal government, is a system in which financial data can be shared directly with financial tech companies, colloquially known as ‘fintech’ organizations.

Currently, this standard of information sharing is not available in Canada, and is restricted to other national banking systems in the U.K. and Australia.

However, out of 250 businesses that participated in a KPMG survey, 65 per cent of them stated that these current restrictions are severely restricting the growth of Canadian commerce.

Respondents cited several factors that would make the modernization of Canada’s banking systems provide an extra layer of economic protection. These include improved customer engagement, faster transaction speed, competitive advantages, and long-term savings.

However, the Government of Canada has stated the potential drawbacks to this system, such as risks surrounding data security.

Despite this, experts in the sphere of enterprise state that the risk is worth it, especially since the landscape of international commerce has seen significant changes since U.S. President Donald Trump’s launch of the ensuing trade war with Canada and beyond.

“Canada is in the midst of a trade war, and it must do everything it can to insulate itself from outside economic threats. We have an opportunity to advance our competitive position by modernizing one of our largest industries – financial services,” said Geoff Rush, Partner and National Industry Leader for financial services at KPMG, in a statement.

Rush continued to note that, beyond the proposed fortification that open banking would bring, it would also allegedly herald a new era of economic competitiveness in Canada.

In a 2024 fall economic statement, the Carney administration mentioned that potential policy around open banking in Canada may be tabled as early as 2026.

However, financial watchdogs such as Rush fear these incentives may be stalling out, and that rapid implementation may be the only way to give Canada an edge in a new and hostile economic landscape.

“We must seize this opportunity now, or we will fall behind.”

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