Many financial applications require aggregating a consumer’s data from banks and financial institutions to deliver their services to market. Financial data such as account balances, transactions, and other information is used for a wide range of use cases across areas such as lending, investment, Buy Now Pay Later (BNPL) and many other fintech services. Open Banking and web connectors are two different data connectivity methods to access financial data, with both methods using application programming interfaces (APIs) to extract the data.

Web connectors (or screen scraping)

Web connectors (often referred to as Digital Data Capture or screen scraping), have been a widely used practice by third party service providers for decades to access and aggregate financial data from banks and financial institutions. It uses an institution’s web based interface (like their online banking platform) to login and acquire a customer’s data, with consent, using their username and password.  

From a consumer perspective, the lack of control and security are often seen as downsides in the use of web connectors. Because a user hands over credentials in the process, it’s unclear who accepts liability if something goes wrong. 

Furthermore, as web connectors rely on the institution’s interface, any updates made can impact a service provider’s ability to access this data, even with consent, making it difficult to deliver their service to market. It is why many countries, including Australia, have moved towards Open Banking as the preferred option.

Open Banking

Open Banking has been implemented as part of the Government’s rollout of the Consumer Data Right (CDR) program. The CDR is an initiative aimed at driving competition and the development of new financial products and services. It gives consumers greater control over their data and the ability to securely share their data for specific purposes, such as using a personal finance management app or applying for a loan. 

Open Banking uses open APIs to enable approved service providers to access and aggregate data from banks and financial institutions. It uses an authentication process that does not require the consumer to disclose their login and password details. 

One of the major advantages of using Open Banking APIs is that the data received is more structured, thus reducing time-to-development (especially when retrieving data from multiple financial institutions). It also provides prescribed guidance on the handling of data and reduces the potential of misinterpretation.

Other benefits of Open Banking include:

• More secure authentication process that does not require the consumer to disclose their login and password combination
• Access to a greater number of financial institutions
• Ability to retrieve financial data up to 20 times per day per consumer
• Consumers have a greater level of control over their data. Open Banking enables consumers to select which accounts they wish to share, and they can turn on or off data sharing via the bank or fintech application
• Parties that provide Open Banking services have been accredited to ensure that they comply with appropriate security practices

Comparing Open Banking and web connectors

The following tables compare Open Banking and web connectors in Australia across a number of features for businesses and then consumers.

Businesses

Feature	Open Banking	Web connectors
Reliability	* Regulated framework * Formal APIs * Participants must adhere to SLAs * Data Holders must adhere to minimum standards in delivering data	* Dependent on the provider and its platform * Dependent on online banking, UI changes, and authentication changes
Data Quality	* National CDR scheme ensures consistency of data quality * Data richness is much higher * Greater data specificity via defined APIs and Data Schemas	* Dependent on the provider and its platform * Less data specificity, relying on common patterns
Speed	* Faster connection time * Results in a better consumer experience	* Slower connection time * Dependent on the provider and its platform
Security	* Very secure, using the financial institutions security measures	* Dependent on the provider and its platform
Scalability	* Access extends beyond Open Banking to all CDR datasets, including energy, telecommunications, non-bank lending etc.	* Dependent on the provider and its platform * Traditionally banking data only



Consumers

Feature	Open Banking	Web connectors
Trust	* All participating businesses are formally accredited via CDR to ensure an appropriate level of security posture * Data is accessed via the Bank’s website, protected by its security measures	* Data is accessed by entering customer login details into the providers application * Use of data is dependent on the provider and its own processes and policies
Choice	* Consumer has full control of what information they share and how it is used * Consumer can revoke at any time	* Level of consumer control is decided by the provider and its own processes and policies
Support	* Avenue to raise issues via the Australian Competition and Consumer Commission (ACCC) * Privacy protection via the Office of the Australian Information Commissioner (OAIC)	* Privacy protection via the Office of the Australian Information Commissioner (OAIC) * Dependent on the provider and its own processes and policies
User experience	* Faster connection time * Data Holder must meet SLAs with availability	* Slower connection time * Prone to availability issues
Security	* Data is accessed via the Bank’s website, protected by its security measures	* Data is accessed by entering customer login details into the providers application

Find out more about Open Banking

Basiq’s Open Banking Hub has a library of relevant resources or visit the website of the Consumer Data Right homepage for more information.