February 11, 2025
Current Landscape
The finance and regulatory sectors are undergoing rapid digital transformation. While the industry pioneers new technology and moves away from conventional platforms, it faces rising fraud, privacy breaches, and growing consumer skepticism fueled by misinformation, disinformation, and challenges verifying information in an AI-driven world.
When Finance Canada’s Electronic Task Force for Payments System Review created DIACC in 2012, its goal was to unite public and private sector partners to develop a secure digital ecosystem. This goal remains, but the need to support a future-focused ecosystem underpinned by verification and authentication is more urgent than ever.
By prioritizing digital trust, Canada can secure its financial systems and enhance competitiveness in the global economy. Interoperable frameworks like the DIACC Pan-Canadian Trust Framework™ (PCTF) ensure systems remain resilient, adaptable, and trusted.
Advancing and Evolving Digital Trust in the Finance and Regulatory Sectors
- Strengthening Economic Competitiveness and Growth
Preventing fraud and building consumer trust are economic imperatives. Fraud costs taxpayers and businesses millions annually, and to ensure Canada remains competitive, we must adopt robust digital trust solutions to reduce fraud’s financial and operational impact. Adopting the right measures will also help Canada attract international investment, foster innovation in financial services, drive growth, and create jobs.
- Enhancing Trust Through the DIACC PCTF to Complement KYC and AML
DIACC encourages its members in finance and payments to adopt the PCTF as a tool to:
- Complement Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations by enhancing remote customer onboarding;
- Authenticate identities with trusted verification systems to reduce fraud in online transactions, digital wallets, and mobile banking; and
- Improve regulatory reporting efficiencies by using verifiable credentials for entity identification.
The PCTF is a critical resource for advancing interoperability, which supports trusted cross-institutional collaboration and strengthens the financial ecosystem.
- Fostering Consumer Autonomy and Addressing Misinformation
Public skepticism fueled by misinformation and disinformation creates friction in adopting digital financial platforms. To tackle this, we can do the following:
- Respect consumer autonomy: DIACC advocates for voluntary digital solutions that preserve traditional verification methods while offering enhanced, secure options.
- Promote digital literacy: Educational campaigns can strengthen consumer confidence by helping Canadians identify trustworthy institutions.
- Use “trust signals”: Institutions should adopt trust signals, such as verified logos or PCTF certification badges, to reassure customers of secure practices.
These efforts respect the diverse preferences of Canadians while promoting confidence in digital services.
- Proactive Fraud Prevention and Responsible Innovation
Fraud prevention is not just about mitigation—it’s about staying ahead. To reduce incidents such as mortgage fraud and title insurance scams, we must:
- Adopt an approach that complements existing client identification methods and includes verifiable credentials, mobile driver licenses and trust registries; financial institutions should integrate DIACC PCTF-aligned solutions to strengthen borrower identification and secure digital proof of ownership.
- Leverage responsible AI for risk detection — fraud prevention measures must include responsible AI and real-time analytics to detect anomalies, mitigate risks, and reduce operational costs.
- Open Banking and the Future of Finance
The government’s commitment to open banking presents opportunities for financial innovation and introduces risks without secure digital trust frameworks. DIACC’s members are encouraged to:
- Use the PCTF to establish interoperable risk management practices, ensuring trusted data sharing across institutions.
- Mitigate risks in consumer-permissioned data sharing by implementing robust verification systems that prioritize data privacy and transparency.
- Align with global open banking standards to ensure Canadian institutions remain competitive and attract international investment.
Open banking offers an opportunity to empower Canadian consumers and small businesses while strengthening the role of domestic innovation on the global stage.
Best Practices and the Way Forward
- Enhance Digital Trust with Emerging Technologies
Canada must adopt emerging technologies to stay globally competitive. Financial institutions can use verifiable data and responsible AI to enhance fraud detection, wallets, credentialing, and compliance.
- Collaborate for Global Competitiveness
Collaboration with international regulators and organizations is essential for aligning Canadian frameworks with global norms, enabling secure cross-border transactions and strengthening Canada’s financial ecosystem.
- Educate and Empower Through Advocacy and Metrics
DIACC is committed to educating Canadians on digital literacy and trust while addressing inclusivity challenges, including:
- Hosting sector-specific workshops and certifications to promote best practices in digital trust.
- Amplifying simple, real-world use cases to demonstrate the benefits of digital trust solutions, such as fraud reduction and consumer empowerment.
- Advocating for enhanced regulations prioritizing secure transactions and privacy while preserving consumer choice.
- Publishing annual metrics on fraud prevention and consumer trust improvements to ensure transparency and accountability.
Conclusion
The finance and regulatory sectors urgently need services with interoperable assurance and trust to meet the growing demands of digital transformation.
By working together, we can:
- Educate citizens to strengthen digital literacy while addressing inclusivity challenges.
- Amplify the role of governments and domestic and world banks in strengthening trust.
- Determine how governments and organizations can best leverage the DIACC Pan-Canadian Trust Framework to complement KYC and AML regulations, build assurance, and mitigate risks for the benefit of all Canadians.
Through education, collaboration, and the strategic use of trusted solutions, we can solidify Canada’s position as a global leader in the digital economy while safeguarding trust, privacy, and economic opportunity for all Canadians.
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