{"id":10632,"date":"2022-11-17T14:38:02","date_gmt":"2022-11-17T03:38:02","guid":{"rendered":"https:\/\/basiq.io\/?p=10632"},"modified":"2023-11-24T03:05:00","modified_gmt":"2023-11-24T03:05:00","slug":"comparing-open-banking-and-web-connectors","status":"publish","type":"post","link":"https:\/\/basiqio.wtdevsite.com\/blog\/comparing-open-banking-and-web-connectors\/","title":{"rendered":"What’s the difference between Open Banking & web connectors?"},"content":{"rendered":"\n

Many financial applications require aggregating a consumer\u2019s 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.<\/p>\n\n\n\n


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Web connectors (or screen scraping)<\/h2>\n\n\n\n

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\u2019s web based interface (like their online banking platform) to login and acquire a customer\u2019s data, with consent, using their username and password.  <\/p>\n\n\n\n

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\u2019s unclear who accepts liability if something goes wrong. <\/p>\n\n\n\n

Furthermore, as web connectors rely on the institution\u2019s interface, any updates made can impact a service provider\u2019s 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.<\/p>\n\n\n\n


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Open Banking<\/h2>\n\n\n\n

Open Banking has been implemented as part of the Government’s rollout of the Consumer Data Right (CDR) program<\/a>. 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. <\/p>\n\n\n\n

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. <\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Other benefits of Open Banking include:<\/p>\n\n\n\n