Open banking and the departure from screen scraping

Open banking has revolutionized the financial industry in recent years by enabling the secure sharing of customer financial data between banks, nonbank financial institutions and third-party financial services providers. This shift from traditional, closed banking systems to more open and interconnected platforms is reshaping how we foster innovation within the industry and empower consumers with greater control over their financial data.

According to Statistica, the value of open banking transactions worldwide reached US$57 billion in 2023 and is expected to increase sharply in the following years. The number of open banking API calls, which serve as the technological bridge that enables secure data sharing, is also expected to go through a significant surge in the upcoming years. Estimates are that these calls will increase to 580 billion in 2027, signaling the rapid expansion of open banking services and their integration into various financial ecosystems.

While open banking continues its steady rise, a significant change related to how data is shared across the ecosystem is reshaping the foundation of open banking: the departure from the age-old practice of screen scraping.

Shifting away from screen scraping

Traditionally, screen scraping has been the go-to method for extracting financial information from a user interface, typically by emulating a user's interaction with a website or application. While the use of API-based data sharing has risen steadily, screen scraping has stubbornly persisted as a staple of third-party financial service providers, particularly when accessing smaller financial institutions. Instead of accessing data through structured and standardized interfaces, screen scraping involves extracting data from the visual representation of the information on a screen.

While screen scraping has been a standard method for accessing financial data, it poses several top challenges and has limitations, including:

• Security concerns – Screen scraping often requires username and password credentials to access account information, raising security concerns because users must share sensitive information with third-party providers, which may compromise the security of their accounts.
• Limited data accuracy – Extracting information from the visual representation of data may result in inaccuracies, especially if the website or application changes. This can lead to errors in the interpretation of financial data, impacting the reliability of services built on screen scraping.
• Lack of standardization – Screen scraping lacks the standardization provided by official APIs. Each financial institution may have a different website structure, making it challenging for third-party providers to create and maintain integrations for multiple banks.

To respond to these challenges and promote a more secure and standardized approach to data sharing, many regulatory bodies and financial institutions encourage the adoption of standardized APIs for open banking. APIs provide a more secure and reliable way for third-party developers to access financial data while maintaining the integrity of the overall financial ecosystem. The industry has largely coalesced around API standards set by the Financial Data Exchange (FDX), a nonprofit standards-setting organization. FDX is focused on providing consumers and businesses control, access, transparency, traceability and security over their data.

The CFPB ruling

Today's banks must prioritize the safety and soundness of sharing customer-permission data with third parties. One way to do this is to put the customer in control: It's their data, after all.

The Consumer Financial Protection Bureau (CFPB) is proposing regulations to implement CFPB section 1033. If finalized as proposed, this rule will foster a data access framework that is:

• Safe by ensuring third parties are acting on behalf of consumers when accessing their data, including with respect to consumers' privacy interests
• Secure by applying a consistent set of security standards across the market
• Reliable by promoting the accurate and consistent transmission of data usable by consumers and authorized third parties
• Competitive by promoting standardization and not entrenching the roles of incumbent data providers, intermediaries and third parties whose commercial interests might not align with the interests of consumers and competition

Your customers want to operate in an increasingly connected digital ecosystem, employing a variety of apps to manage their lives. In a perfect world, third-party apps will integrate seamlessly with customers’ bank accounts so they can utilize data for financial planning and lending and share verified persona attributes. However, explicit consent from the customer to securely do all these things is key.

The FIS® Open Access solution gives consumers and businesses the ability to securely grant and manage consent for any third-party application to access their banking data through standard FDX APIs. The solution enables banks to ensure compliance with data-sharing regulations while gaining the benefits of increased security and efficiency from eliminating screen scraping.

Embracing a secure and connected future

Open banking, with its emphasis on transparency and collaboration, has not only opened the floodgates of innovation, but also handed the reins of financial control back to consumers. The power to securely share, manage and utilize financial data is no longer a distant dream but a tangible reality.

The shift away from screen scraping is a testament to the industry's commitment to effective security and privacy standards. With the introduction of APIs and more sophisticated data-sharing mechanisms, financial institutions and third-party developers can now collaborate seamlessly while safeguarding the integrity of sensitive information. Striking the right balance between innovation and security will create a resilient open banking ecosystem that benefits everyone involved.