Future-Proofing For When The Screen-Scraping Curtain Comes Down

Picture the scene.

You’re on the world’s largest island. And you need a loan. Or a wage-advance. Or a mortgage.

You’ll use a Government-mandated, fully secure method of linking and sharing your bank data (which is required for the loan approval process to demonstrate your bona fides) to share your transaction history with your lender of choice.

You’ll use the optimal method here (Open Banking) instead of the sub-optimal method (screen-scraping).

Part of the reason for choosing the ‘optimal’ method, is that the ‘sub-optimal’ method has been phased out, banished for eternity to a deserted island (a bit like Napoleon but without the comeback)

So you only have one way of speeding up and automating, what is known as, the lending journey and that, dear reader (or dear banker) is to offer your customers the opportunity to use ‘Open Banking’.

Open Banking Versus Electronic Data Capture AKA Screen-Scraping 

The debate on this topic has been ferocious. Well, as ferocious as a data debate can be. We’re hardly talking ‘Ali v Frazier’ here. 

But, ferocious in its way, it has been. And I’ve had a front-row view for much of it.

After all, who can forget one of the Big 4 banks attempting to and successfully blocking the screen-scrapers when micro-investing app Acorns (now Raiz) was picking up a head of steam?

This stopped Raiz users receiving their round-ups - the sole purpose (back then) for using the app - when they made a purchase using the bank’s card.

The apocryphal story goes that Raiz suggested their own disgruntled app users reach out to the “bank’s” contact centre to complain about the interference. The volumes of calls was such that the “bank” immediately re-opened the ability to be scraped and put it down to a technical error on their side, nothing more.

These Bank v Fintech stoushes aside, it genuinely (finally) feels like a tipping point is being reached, and 8 long years after that initial cut-off of scraping (8 years which has been extended, bizarrely, by banks in general apathy towards Open Banking) the majors Australian banks are following the lead of some of the major international banks by putting the squeeze on screen-scraping.

What Should I Do Now? - Practical Next Steps

1. Let’s assume you’re a lender of some description and that currently circa 50%-ish of your loan applications involve some kind of electronic data capture (this seems to be a fair estimate based on numerous banks and non-bank lenders I’ve spoken to over the past 5 or 6 years. Wage-advance players are at 100%)

For the rest of these applications (the other 50%), you’re likely receiving statements and payslips the “old fashioned” way and having to do extra manual work on them.

If you are a bank or mutual bank, you could use Open Banking as the secure and Government-backed lever to get this 50% closer to 75%, for example.

Imagine that: 75% of incoming loan applications are now mostly automated (or in some way automated). 

Meaning - and come along with me for the mathematical ride - only 25% are now processed the old-fashioned way, requiring a tonne of manual intervention.

Did anyone say “operational efficiency?”

With this new, improved (not to mention highly secure and compliant) way of processing loan applications, you could potentially go as far as telling customers (or gamifying things by rewarding them) that you’ll only process applications with bank data via Open Banking.

Radical? Perhaps.

Already in place with many Fintech lenders? Definitely.

The way of the future? 100% 

The key to this whole piece is providing a safe, secure, frictionless (or as frictionless as possible) loan application process that ALSO makes sense to a bank or non-bank lender’s back office and, ultimately, because we all know the game we’re actually in, the board and the shareholders.

2. I would couple the new Open Banking data rails with the ability to interpret the data accurately so as to power better origination decisions.

Things like intra-bank transfers, multiple income sources for the gig economy and beyond, are all table stakes now in a way that correctly identifying a supermarket was way back in the day (see this article on data categorisation).

Interestingly, a leading screen-scraper has suggested that the categorisation-ability of Open Banking data is 6% worse than on screen-scraped data.

This is curious for a few reasons.

1. They obviously would say their method is more accurate since they have a MASSIVE vested interest in it being so.

2. 6% is obviously a made up number.

3. If it was me, I’d have at least made the delta double-figures to make it meaningful.

4. The “6%” will quickly be swallowed up as open Banking data is better understood and the so-called “data quality” issues are ironed out.

On the basis of all of this, I reckon there’s probably a reasonable claim to say that ALREADY the accuracy of categorising Open Banking transactions are at least on-par with screen-scraping so that puts that one to bed. Phew.

Conclusion

In planning your next 2 to 3 year strategy as a bank, mutual bank or non-bank lender, I’d seriously give thought to envisaging a world where screen-scraping is phased out (just as it was quickly in the UK), and give some thought to the customer benefits you’re able to pass on via Open Banking and, in turn, the benefits that they will bring to your organisation.

It won’t be easy but, as anyone who has read this article or being in the Data Holder trenches, becoming a ‘Data Recipient’, will attest, becoming a Data Recipient is an absolute cake-walk compared to becoming a Data Holder.

Marry this new, secure, customer-friendly data source with robust, A.I-powered lending insights to facilitate better lending decision-making and you could find yourself soaring up the rankings and creating memorable new customer experiences (and increasing your share price).