NextGen discusses open banking opportunities amid proposed ban
The federal government discussion paper proposing a potential ban on the use of screen scraping has been welcomed by technology solutions provider NextGen.
Screen scraping is a process that collects displayed data to support a range of activities. There are concerns that it poses risks to consumers, particularly where personal login information, such as internet banking login details, are shared with third parties.
The Consumer Data Right (CDR), from which open banking is based, gives consumers a general right to control their data, allowing them to access data about them held by businesses and safely share their data with trusted recipients.
The government has released a discussion paper on CDR, seeking views on the nature of the screen scraping market. Additionally, it seeks feedback on whether screen scraping should be banned where the CDR is a viable alternative, as recommended in the Statutory Review.
NextGen chief customer officer Tony Carn (pictured above) said that NextGen had “long been committed” to providing secure, cutting-edge solutions that eliminate the need for screen scraping practices.
“We applaud the government’s efforts to prioritise data security and consumer protection in the financial sector,” he said.
Speaking to MPA about progress made in consumer data protection and open banking, Carn confirmed that CDR covered around 99.5% of all Australian household accounts.
Currently, 114 banks operating throughout Australia now use open banking to share data (all authorised deposit taking institutions are now required to comply), he said.
Commenting on comments made by NextGen company Frollo around gaps in information provided through open banking by some banks, including some inconsistency in reporting relating to loan details, Carn said that where lenders were maturing their data holding capabilities, those gaps were closing.
He said categorisation of data (e.g., income and expenses) could be an area of confusion, but this had been the case more in the application of machine learning to put data into specific categories. As an accredited data recipient (ADR) of real-life cases, NextGen had seen 100% reliability of data.
“The data that we are using in real-life instances is 100% reliable – we don’t see any gaps in the inaccuracy,” Carn said.
He said that a number of banks were at various stages of using open banking data for their business models, including three of the major banks.
About 1,000 brokers have so far had access to obtaining their customer data via open banking, compiling it into accredited data recipient (ADR) generated bank statements and financial profiles, and pre-populating CRM systems, he said.
How might brokers benefit from a screen scraping ban?
If the government was to prohibit screen scraping where CDR is a viable alternative, Carn said that the ability to provide open banking data to a lender for assessment provided a number of benefits.
Specifically, data obtained by a broker as an accredited data recipient would mean the data is “current” and “prominent”.
“A lender can consume an application [on the basis] that it is current data (rather than from a bank statement of a month ago, for example),” Carn said.
“[A lender will also] know the prominence of that data because it’s been provided by a broker, in their capacity as a trusted adviser as an accredited data recipient, meaning they know where it came from and can rely on it.”
Additionally, with a client’s consent, brokers could receive access to their data on an ongoing basis, which Carn acknowledged could assist the broker in a number of ways, such as when conducting reviews.
NextGen open banking was first launched with mortgage aggregator group Finsure in November 2022, and is now available to brokers under a number of broking groups.
The technology solution provider is working with a number of major lenders to bring CDR-enabled open banking solutions to market.
Carn said that Frollo recently provided a model to AMP brokers and wealth advisers, giving them portal access to customers who had provided consent, allowing them to look at their details on a day-to-day basis.
Lenders such as P&N Bank and Beyond Bank had introduced personal finance management apps where customers were able to obtain a single view of their accounts, as did the Frollo money management app.
Carn said in contrast to screen scraping, open banking offered a number of advantages, including consent control (clients must provide explicit consent before data sharing occurs), no need for login credentials and regulatory oversight and standards.
Speaking at an Intersekt23 Festival on August 30, 2023 , Assistant Treasurer and Minister for Financial Services Stephen Jones highlighted the risk around consumers providing their credentials, such as login details and passwords, for a third party to access their account.
Jones acknowledged that CDR must not be forced into uses it wasn’t suitable for, or where it wasn’t mature enough to be effective, but also the risk in consumers handing over online banking passwords to lenders, mortgage brokers and others.
On CDR, Jones said the strategy mapped out for the next two years was aimed at driving take up and use.
Does screen scraping still have a role to play in the gathering of information for mortgage applications? Share your thoughts in the comments section below.
