Jack Henry is closing in on its goal to eliminate inbound screen scraping for the more than 700 banks and credit unions that use the fintech’s digital banking platform, the company said.
The banking technology provider, which started phasing out the practice five years ago, said the effort is on track to be completed by the end of the summer.
“Screen scraping has been a necessary evil since the technology originated in 1989,” said Lee Wetherington, Jack Henry’s senior director of corporate strategy, referring to the form of data collection where a third party requests credentials from a customer’s bank account to “scrape” information that is then provided to a fintech, such as a payments platform or budgeting app.
“It kind of took hold in the early ’90s and found its way into banking applications thereafter,” Wetherington said. “But in that entire history, we've always known it's a problem. It's a problem for security. It's a problem for privacy. It's even a problem for user experience, because it breaks so often.”
Jack Henry’s Banno digital banking platform has application programming interface integrations with data exchange platforms Finicity, Akoya, Plaid, Envestnet | Yodlee and Intuit.
Wetherington said it took nearly two years to negotiate the legal and contractual parts of those arrangements, while the actual work of putting those APIs into place began about 2½ years ago.
To date, Jack Henry has replaced inbound screen scraping on hundreds of thousands of third-party apps across millions of account holders at the financial institutions that use the Banno platform, Wetherington said.
“At some point, you have to communicate that you're planning to end inbound screen scraping, just to give fair notice to all the other smaller screen-scraping-based aggregators that they need to get on that legitimate API of ours by this target date at the end of summer,” Wetherington said.
Fintechs like Jack Henry aren’t the only ones pushing for the transition to APIs, standardized software widely regarded as a more secure way to connect consumers’ accounts to financial apps.
As the Consumer Financial Protection Bureau embarks on its open banking rulemaking process, aimed at giving consumers greater control over their financial data, the agency is looking to do away with screen scraping by requiring banks to establish and maintain APIs.
Small banks, however, are calling for the agency to take a measured approach to a screen scraping phase-out, saying an abrupt transition would put community banks at a disadvantage.
Citing the high costs associated with a transition to APIs, the Independent Community Bankers of America is requesting a five- to-eight-year transition time frame, which would be staggered based on a bank’s asset size.
But Wetherington said Jack Henry believes the transition can be done in a much shorter span.
“We think it's not only the right thing to do, but we think it can be done sooner, a lot sooner than five to eight years,” Wetherington said. “We’ve figured that out already with what we’ve accomplished on our own digital banking platform.”
Wetherington said it’s imperative that fintechs and banks make the transition to APIs sooner rather than later amid a new wave of fraud threats.
“Given the pioneering that we’ve done with different financial data exchange platforms, we're hoping that momentum can make this all happen in a much shorter time frame so that you don't have banks and their customers as exposed to this new onslaught of artificial intelligence augmented fraud, and the security risks that are coming out,” he said. “We're proof that it can be done, and we're hoping that others will follow suit.”