The feds are set to outlaw screen-scraping. Is an outright ban the answer?

The federal government plans to explicitly ban screen-scraping, an insecure financial data-sharing practice for consumers. It made the promise as it revealed the second piece of legislation needed to move forward on a long-awaited open banking system.

The future of screen-scraping will depend on “how well open banking is implemented and executed.”
Daniel Eberhard,
Koho

Screen-scraping is a method of financial data collection that has been heavily criticized as risky, glitchy, and insecure. It allows consumers to plug their bank account information into third-party apps so they can use FinTech services, such as a budgeting tool or an app to build credit history.

The government’s proposed budget implementation bill says companies must not use an interface or application to access a consumer’s data using their login information. It also notes this rule is “subject to the regulations” still to come from the Department of Finance.

The Canadian government warns of “security, liability, and privacy risks” when using FinTech apps that access data through screen-scraping, including the potential loss of their bank’s protection against unauthorized transactions.

For years, this has been a dominant way of sharing consumer financial data, and it’s even used by multiple big banks, according to The Logic. Canada’s long-awaited open banking system, which has been repeatedly delayed, would establish a secure way for customers to share their financial information with third parties and more easily switch from banks to other financial service providers. Application programming interfaces (APIs)—software intermediaries that help two applications talk to each other—are seen as the superior form of data-sharing, and are set to become the main way to share data.

The legislation is the second piece of the Consumer-Driven Banking Act, first introduced into law by the previous Liberal government in 2024. With this federal budget approved, Canada’s financial system is now closer to making open banking a reality.

The Bank of Canada, which took over the open banking file from the Financial Consumer Agency of Canada, is now responsible for approving registrants as payment service providers. This subjects them to stricter rules and reporting. It’s also required to “foster competition in the financial sector in the interests of consumers,” according to the legislation.

Abraham Tachjian, former open banking czar and chief regulatory affairs officer at Brim Financial, wondered if eventual regulations from the Department of Finance would detail circumstances in which screen-scraping could still be allowed.

“It’s foreseeable that the regulations could ban screen-scraping altogether, or have a timeline to ban it, or alternatively, provide for exceptional circumstances where screen scraping would still be allowed,” Tachjian told BetaKit. This could include situations where the API portal of a participant is not functioning or is having continuous issues.

Adriana Vega, executive director of Fintechs Canada, agreed that a screen-scraping ban is “directionally sound,” but argued that a ban should only come into play once open banking is working effectively. “Regulators should further allow for exceptions, as API disruptions could have serious financial consequences for Canadians,” Vega said in a statement to BetaKit.

Daniel Eberhard, founder and CEO of FinTech company Koho, told BetaKit the future of screen-scraping will depend on “how well open banking is implemented and executed.”

The risky data-sharing practice is “not a good backstop,” he said. Ideally, the system would have working APIs and widespread adoption across financial institutions.

“All big banks have to play ball,” Eberhard said. Otherwise, screen-scraping would have to continue to be available for the non-participating bank customers who still want to use FinTech services.

With an open banking system that now tasks the Bank of Canada with approving registrants, the users of screen-scraping will likely shift to “nefarious” actors that haven’t been approved, Eberhard said. “The answer is not that you keep this grey market open,” he said.

Some Canadian tech companies have already developed workarounds to avoid screen-scraping. Montréal-based Flinks provides A PIs for FinTechs to access their customers’ financial data without relying on the technique, though it’s more akin to a “private” form of open banking rather than a public system.

The updates to the Consumer-Driven Banking Act detail more competitive measures to give consumers and non-traditional financial institutions more control over their data.

The feds said that no financial institution can charge fees for the data they’re sharing. Once you’re participating in the open banking system, a data holder can’t impose additional conditions once you request data.

The legislation doesn’t provide a more detailed timeline, but the feds have said that they’re targeting next year for read–only access and Real-Time Rail (an instant payment system), and 2027 for write access.

Feature image courtesy Unsplash. Photo by Jonas Leupe.