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Institute on Governance

Case Study: Designing Governance Options for Open Banking Implementation

Summary: The global economy is rapidly transforming and with those rapid technological changes have come different expectations on the financial sector. In this context, the IOG was approached to provide governance options for the governance and administration of open banking in Canada. We designed an innovative, multi-stakeholder corporate structure for Canada’s Open Banking System that was consistent with Government of Canada organizational practices and ministerial accountability, while drawing on best practices internationally.

Methodology:

We undertook a rigorous process involving the following elements:

  1. Understanding the Global Context: The IOG team sought to understand the spectrum of governance models adopted globally, ranging from market-driven to government-led, and hybrid approaches.
  2. Engaging Informants: Stakeholder interviews were designed to capture diverse perspectives, including industry representatives, regulatory bodies, consumer groups, and other relevant stakeholders.
  3. Governance Assessment Framework: We used our proprietary analytical tools to assess organizational design to ensure that structures, processes, and practices allowed the organization to deliver on its mandate. Governance Assessment Framework pillars assessed: Delivering on Mandates and Collaborating for Outcomes.

Impact

The final report contextualized the findings within the Canadian context, evaluating the feasibility and implications of different governance options. We identified the core features of an effective governance structure for open banking in the context of “best practice”. These core features included framework legislation, core mandate/ powers duties and functions, corporate form, independent board, conflict of interest regime, and funding.  Various models were advanced, and pros and cons were identified against each. We ultimately proposed a board governed statutory corporation established by the Government of Canada but operating with significant independence in matters of organizational management and delivery of its mandate.