More lenders get behind open banking

Screen scraping consents now removed for 26 banks, says Frollo

More lenders get behind open banking

In a move that indicates a growing number of lenders are embracing open banking, Frollo has confirmed that 26 banks are now only available to link via open banking in its money management app.

The fintech, which has been live with open banking for two-and-a-half years, said screen scraping had been disabled for a further 20 banks in November, turning to open banking data instead.

Open banking is the first sector of the Consumer Data Right (CDR) which gives consumers control over their data, allowing them to access it and share it with accredited third parties. Examples of financial data that can be shared using open banking includes account balances, product information and transaction details. As more lenders begin to share and receive CDR data under the open banking regime, screen scraping is increasingly being left by the wayside.

Frollo said in September it was in the process of removing screen scraping from its free Frollo money management app, confirming the big four banks (CBA, ANZ, NAB and Westpac) had already made the switch, and were only available via open banking.

Frollo CEO Tony Thrassis (pictured above) told MPA that Frollo led the change to phase out screen-scraping and prioritise open banking to give consumers the best possible experience.

“With the recent completion of the open banking roll-out, we’ve reached a point where open banking is a superior alternative to screen scraping for many use cases,” Thrassis said. 

After removing the option to create screen-scraping consents with the big four banks in September, Frollo has released two further updates, removing the option to create new screen-scraping consents for a greater number of banks, he said. The banks include Beyond Bank, P&N Bank, Bankwest, St. George Bank, Bank of Melbourne, BankSA, Macquarie Bank and Bendigo Bank.

“Now, 26 banks are now only available to link via open banking in the Frollo app,” Thrassis said.

Secondly, where open banking was available, Frollo made it the default for linking an account, he said. To use screen-scraping (if available), a user has to specifically select it as an option.

“We’ll continue phasing out screen-scraping where open banking is available, as we’re testing and confirming with data holders that everything works as it’s supposed to,” Thrassis said.

What are the consumer benefits of open banking?

Noting recent data breaches and hacks impacting large businesses in Australia (such as Optus and MediBank), Thrassis said the security and privacy benefits of open banking was very relevant.

“With open banking, users don’t share banking credentials, data is only exchanged through secured APIs and their privacy is protected,” Thrassis said. “Open banking also provides a much better user experience, enabling real-time money insights and giving consumers complete control over their data.”

Thrassis said mortgages were a great example of where richness of data provided through open banking could lead to innovative new propositions.

“Instead of receiving just the account name and balance, we [receive] the loan type, minimum repayment amount, loan end date and maximum redraw amount (among other things),” Thrassis said. 

This information is presented to users in the Frollo app, to help them understand their financial products, and to get the most out of them, he said.

“We do this with mortgages, but also savings accounts. For example, when we sent Frollo users who missed out on their bonus saving interest one month a reminder, 50% of them achieved their bonus interest the next month.”

Thrassis said Frollo app users weren’t currently able to compare financial products using open banking data, but that it was possible.  For some products, rich data was provided more reliably than others, he said.

“Our recent data quality analysis found that mortgages, in particular, have some gaps. All of the basic data is available, but things like original loan amount and maximum redraw are not always provided by data holders,” Thrassis said.

The government recently started looking more closely at quality issues, which Thrassis said he agreed with.

“We need data holders to take responsibility for providing their customers with the same reliable, rich and usable data regardless of the channel. Whether customers get their data in the online banking portal or via CDR, data holders need to be accountable for providing a good customer experience,” he said.

How brokers can benefit

As brokers facilitated a high proportion of mortgages in Australia (68% of new residential home loans in the June 2022 quarter, according to latest MFAA data), Thrassis said brokers played a key role in driving the uptake of open banking in Australia.

“Through the trusted adviser model, brokers will be able to access open banking data from their clients, streamlining the lending process and helping their clients make better decisions.”

Thrassis admits that the roll-out of open banking has not been perfect and acknowledged it had taken over two years for open banking to become fit for purpose. Moving forward, he suggested the government could also direct its attention towards data quality and consumer awareness.  

According to Frollo, over 110 banks are now using open banking to share rich data for over 30 different financial products.

“I look at year three of open banking as the year of go-live. More and more businesses are launching their open banking use cases: from banks like Beyond Bank and P&N Bank launching financial well-being apps, to mortgage aggregators like Finsure using an open banking powered financial passport to streamline the lending process,” Thrassis said.