FP: open banking needs digital ID system using advanced tech

The Canadian Bankers Association says Canada must create a digital identification system, potentially using technology such as blockchain, biometrics and document review over a live video connection.

Neil Parmenter, CBA’s chief exec, said in a speech to the Economic Club of Canada that the need for digital identification “will only grow more urgent” as Ottawa explores the possibilities of open banking, the payments system is modernized and blockchain and artificial intelligence move into “new frontiers.”

The Department of Finance last week officially launched its public consultation on the merits of open banking, a framework that would allow consumers and businesses to permit third parties such as fintechs to access their financial data to provide innovative services.

Parmenter says the CBA is calling for a “federated” model of digital identification which would create linkages between federal and provincial systems, which hold information such as social insurance and drivers’ licences, respectively.

He says this digital identification system, which the CBA previously outlined in a white paper, could make it possible to authenticate an individual’s identity electronically using multiple digital reference points from different systems.

“Because this digital network is connected, yet decentralized, the risk of compromising the system is reduced by eliminating ‘honeypots’ of data that hackers tend to target,” Parmenter said.

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