Treasury considers an end to bank account password sharing
Treasury is considering banning “screen scraping” of financial data from bank accounts, a move that could force data sharing across the financial services sector into the alternative open banking regime.
The major banks have spent more than $1 billion building open banking for the federal government, according to sources, as the first industry adoption of the “consumer data right”, a major competition policy. However, volumes of data passing through CDR remain miniscule, raising questions about whether it will become a white elephant.
Uptake has been slow because screen scraping – which involves sharing banking passwords with third parties who then access bank accounts and collect data that supports the provision of products and services – is cheap and easy. It also provides the same, or even better quality banking data than the CDR is delivering.
Data from screen scraping, also known as digital data capture, is widely used by fintechs and banks to price risk, validate income, or provide insights on customer spending or behaviour. It is also used by energy providers and non-bank lenders.
But Commonwealth Bank for many years has argued that the technique carries security risks given it involves the sharing of account credentials: something open banking eliminates.
In the European Union and the United Kingdom, governments have banned screen scraping, forcing data into their equivalent open banking regimes.
An independent statutory review of the CDR by Elizabeth Kelly in September called for screen scraping to “be banned in the near future in sectors where the CDR is a viable alternative”.
Treasury has now asked market participants to provide, by late October, “views on a ban on screen scraping where the CDR is a viable alternative”; and “what timeframe would be required for an industry transition away from screen scraping and why” – suggesting a ban is being considered.
Screen scraping involves sharing passwords to share banking data. Bloomberg
Treasury said it is aware screen scraping “is currently well integrated in some industry sectors” such as in the credit industry to meet responsible lending obligations. “This could be because the CDR is relatively new, has higher costs compared to screen scraping, or due to the CDR’s requirements around data handling and consent,” Treasury said in the paper, published on Wednesday.
Ending screen scraping will have major implications for the fintech industry – and loan assessment by banks and non-bank lenders – unless the quality of data in open banking is at least as good as what screen scraping can provide.
The Australian Financial Review reported earlier this year about a litany of issues in the CDR, including some banks’ data being unreliable, and calls for the ACCC to resolve problems more quickly. The government’s response to the statutory review into the CDR recognised the importance of “ensuring the data shared between data holders and data recipients is accurate and reliable”.
Rehan D’Almeida, general manager at FinTech Australia, said the government’s approach to screen scraping was “measured and consultative”. “The fintech industry agrees that going forward, access to data should be governed by a rigorous open banking regime,” he said.
“However, it would hurt both consumers and competition in the financial services sector to phase-out screen scraping without a clear approach in place. This is especially the case in areas such as lending and consumer finance, where data can be used to provide more tailored experiences for consumers. The focus now should be on giving CDR participants certainty to help with this transition.”
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