The Government's proposed Budget Implementation Bill contains more details on the rollout of open banking.
The federal government plans to outright ban screen scraping, an unsafe practice for sharing financial data for consumers. He made the promise because he showed that a second piece of legislation was needed to move forward in the long-awaited open banking system.
The future of scraping will depend on “how well open banking is implemented and implemented.”
Daniel Eberhard
Choose
Screen scraping is a method of collecting financial data that has been heavily criticized as risky, flawed, and unsafe. It allows consumers to connect their bank account information to third-party apps so they can use FinTech services such as a budgeting tool or a credit history app.
Government proposal budget execution bill says companies should not use an interface or application to access consumer data using their login information. He also notes that the rule is “subject to regulations” that the Treasury Department has yet to adopt.
Canadian government warns “security, liability and privacy risks” when using fintech apps that access data through screen scraping, including the potential loss of your bank's protection from unauthorized transactions.
It was the dominant way of sharing consumer financial data for years, and was even used by several large banks, according to the company. Logics. Canada's long-awaited open banking system, which has been repeatedly delayed, will provide a secure way for customers to share their financial information with third parties and allow them to more easily switch between banks and other financial service providers. Application programming interfaces (APIs)—software intermediaries that help two applications communicate with each other—are seen as an excellent form of data sharing and are destined to become the primary way to exchange data.
The legislation is the second part of the Consumer Banking Act, first introduced by the previous Liberal government in 2024. With the approval of this federal budget, Canada's financial system is now closer to making open banking a reality.
Bank of Canada, which took over the open bank file from the Financial Consumer Agency of Canada, is now responsible for approving registrants as payment service providers. This subjects them to stricter regulations and accountability. According to the legislation, it is also necessary to “stimulate competition in the financial sector in the interests of consumers.”
Abraham Tachjian, a former open banking executive and director of regulatory affairs at Brim Financial, wondered whether future Treasury regulations would detail the circumstances under which scraping screens might still be allowed.
“It is foreseeable that the rules may prohibit screen scraping altogether or have a time frame for prohibiting it, or alternatively provide for exceptional circumstances in which screen scraping would still be allowed,” Tachjian told BetaKit. This may include situations where a member's API portal is down or has ongoing issues.
Adriana Vega, executive director of Fintechs Canada, agreed that a ban on screen scraping is “appropriate” but said the ban should only come into effect once open banking is up and running effectively. “Regulators must continue to allow exceptions as API failures can have significant financial consequences for Canadians,” Vega said in a statement to BetaKit.
Daniel Eberhard, founder and CEO of fintech company Koho, told BetaKit that the future of screen scraping will depend on “how well open banking is implemented and implemented.”
Risky data-sharing practices “are not good defenses,” he said. Ideally, the system should have working APIs and be widely adopted by financial institutions.
“All the big banks have to play by the rules,” Eberhard said. Otherwise, screen scraping will continue to be available to non-participating bank customers who still wish to use FinTech services.
With an open banking system that now tasks the Bank of Canada with approving registrants, screening users are likely to move on to “nefarious” entities that were not approved, Eberhard said. “The answer is not that you keep this gray market open,” he said.
Some Canadian tech companies have already developed workarounds to avoid screen scraping. Flinks from Montreal provides API for FinTechs access their customers' financial data without relying on this technique, although this is more like a “private” form of open banking rather than a public system.
Updates to the Consumer Banking Act detail more competitive measures that will give consumers and non-traditional financial institutions more control over their data.
Federal authorities have said no financial institution can charge a fee for the data they share. When you participate in an open banking system, the data owner cannot impose additional conditions after you request the data.
The legislation doesn't specify a more detailed timeline, but federal officials have said they plan to introduce read-only access and Real-Time Rail next year, followed by write access in 2027.
Image provided Unsplash. Photo by Jonas Leupe.
