The debate over the future of screen scraping in Australia is being complicated by the slow roll out of Australia’s open banking regime, a data sharing system which would make the practice obsolete.
Screen scraping occurs when consumers provide their banking username and password to a third party, such as a fintech, in order to access their data to power services such as budgeting tools or credit checks.
While ASIC said it was not intending to stop the practice during a senate hearing earlier this month, an ongoing inquiry into fintech and regtech is considering a potential ban on the practice, which is already being phased out in the EU.
Australia’s biggest bank continues to protest use of the method as Australia’s fintechs wait for the open banking to mature to a point where they no longer need to rely on screen scraping.
“Screen scraping is old technology. I think there are a lot of people in the marketplace right now that are addicted to it,” Andrew Laycock, CEO of fintech Hay, told Which-50.
“I’ve seen at conferences people talk about how screen scraping is best in class technology. I just don’t view it like that.”
Laycock is the founder and CEO of Hay, an aspiring neobank which recently unveiled its own app and transaction account. With a background in financial technology in the UK, Laycock has ensured Hay’s technology infrastructure was built with GDPR and open banking in mind.
“I have seen what happened with screen scraping moving to the API open banking parallel world and the change that created. Australia needs to wake up that open banking is coming and the API-led environment is the way to go,” he said.
Laycock noted a lot of today’s financial technologies have great UI or UX but are built on legacy bank systems, which limits their ability to continue building and to continue innovating. APIs and platforms will be the future of financial technology, he argued.
After several delays, open banking is due to begin in July, although there are already rumblings COVID-19 could mean another setback. Laycock believes open banking will take awhile to truly arrive in Australia, however when it does it will “redefine how banks are looked at and how financial services are provided to customers.”
For now Australia’s digital banks need to balance their desire to provide consumers an open banking-like experience with the limited tools they have access to before the open banking data becomes available to them.
86 400, an Australian neobank that launched in September, uses screen scraping to aggregate multiple accounts from different banks into its app – a use case which should be relatively simple in a mature open banking environment.
This week 86 4000 CEO Robert Bell told Which-50 the practice is safe and delivering value to customers. But he also acknowledged that a mature open banking environment has the potential to be the “simplest” way of sharing customer data in the future.
For now, Bell says, with open banking yet to launch and likely to take years to reach that level of functionality where consumers see real benefits, screen scraping is good enough and safe enough.
“We’re very comfortable with the security that we have in place. We’re very comfortable with our partner that we use. But most importantly customers are saying to us that the data we provide to them is really, really useful.”
Bell, whose company is currently testing open banking protocols and systems along with the big four banks, says it is “disingenuous” for incumbents to argue against screen scraping while not moving faster on open banking.
“[There is] no argument from me that open banking has the potential to be the simplest way of doing it. But I think it’s disingenuous of the big four banks to try and have [screen scraping] stopped and at the same time to be slowing down open banking.
“You need to think about it from a benefit of the customer [standpoint]. So is [screen scraping] beneficial to the customer? Absolutely. And that’s that’s the way we look at it.”
The Commonwealth Bank of Australia has pushed back against claims that delays in the implementation of open banking initiatives are due to anti-competitive behaviour.
In a new submission to the Senate Select Committee on Fintech and Regtech the bank argued the initiative is complex and takes time to implement reliably.
“As one of the first organisations to be delivering open banking for our customers, CBA is committed to building trust in the ecosystem and maximising its benefit for all Australians. We are working towards meeting the revised timeframes for implementing the next phases of open banking, including the sharing of consumer data,” the submission states.
CommBank also used its submission to reinforce its argument that screen scraping and “sharing usernames and passwords is fundamentally unsafe”. The bank’s fraud analytics team conducted a study on the fraud propensity of customers who had logins via a data aggregator and found that customers with logins via an aggregator are two or more times more likely to experience fraud.
“Whilst the study does not attribute cause for the statistical relationship, it does demonstrate a probable correlation between the unsafe banking practice of customers who share log-ons and password credentials with third parties and increased fraud. Behaviours that place customers at greater risk should not be encouraged,” the submission states.
The bank noted that open banking, by design, does not require customers to share passwords and warned against allowing screen scraping to continue when open banking is in place.
“Allowing screen scraping to continue alongside the open banking regime will result in effectively ‘dual schemes’ being in operation, to the detriment of consumers as well as the broader CDR regime. Customers who share data outside the CDR regime may not be aware that they do not have the same consumer and privacy protections.”