American Express (Amex), a credit card company, submitted a statement to the Australian Senate Select Committee on Financial Technology and Regulatory Technology (‘The Committee’) laying out its position on the use of screen scraping technology by fintech regulatory technology (‘RegTech’) firms.
The Australian Parliament (‘Parliament’) formed the Committee in 2019 for the “objective of promoting effective and sustainable growth in the fintech and regtech sectors in order to enhance Australia’s productivity and economic competitiveness.”
The issue is whether or not screen scraping — which allows third party RegTech firms access to customer data — should be allowed. Currently, the practice is banned in Europe and the United Kingdom because it provides opportunities for fraudsters to create data breaches. However, RegTech helps firms like Amex reduce the time and cost of regulatory compliance.
In the statement, Amex writes that Parliament should do more to provide businesses with guidance about RegTech companies, up to and including actual endorsements.
“[However], onboarding such companies has often proved challenging. We consider that regulators should be more proactive in assessing and endorsing compliant RegTech products and services,” the statement said.
On the screen scraping issue specifically, Amex writes that although controversial given the Australian Consumer Data Right (CDR), Australian customers do use screen scraping technologies. For this reason, regulation and protection would be preferable to an outright ban that would increase barriers to regulatory compliance, and leave customers vulnerable.
“Whilst CDR may render screen scraping services obsolete in time – there is still likely to be a significant period where CDR and screen scraping co-exist,” the statement said. “We think that the ePayments Code should provide protection and clarity for customers when using RegTech services.”
In addition, Amex comments on the fairness of the current system of RegTech regulation and a potential ban on it altogether. Major Australian banks often refuse to cover liabilities for customers that use regtech, a practice Amex claims harms adoption. However, it’s real issue is that these same banks use the technologies themselves.
“[We] consider it inappropriate for consumers to be held liable by their bank for using RegTech services, particularly when those RegTech services are being used by those banks to acquire new customers,” the statement said.
Although not directly stated, the belief is Amex sees the issue not only in terms of regulatory costs, but competition. If banks can use RegTech while card issuers cannot, it may allow banks to gain a competitive advantage.