The federal government plans to use forthcoming legislation on open banking to crack down on a data-harvesting method known as screen scraping, The Logic has learned, raising questions about the future of accounting software, lending apps and other fintech services that rely on it.

The government plans to include “a provision for the phase-out and eventual elimination of screen scraping” in the legislation, which it has said it intends to introduce in the coming weeks, according to a document obtained by The Logic. Finance Canada sent the document in August to companies and industry associations that will participate in open banking, according to three sources who received it. The Logic has agreed not to name them because they are concerned it would damage their relationship with Ottawa.

“Screen scraping” is the term for a workaround in which consumers give their bank login credentials to a third party in order to use fintech services that require their financial data to function. Both banks and fintechs have criticized the practice as being cumbersome and error-prone. It also requires consumers to trust the company doing the screen scraping not to steal their funds or sell their financial data.

Finance Canada has billed the transition away from screen scraping as one of the benefits of open banking, a framework that will require banks to securely share financial data with outside companies. The government will mandate that banks instead grant accredited firms access to a direct feed at a customer’s request, making it more efficient for them to gather data and eliminating many of the security risks.

Open-banking legislation has faced repeated delays in Canada. In the meantime, a wide variety of fintech startups and other businesses have come to rely on screen scraping, as have four million Canadian consumers, per a 2019 Finance Canada estimate. (The department did not respond to a request for updated figures.)

Michelle Beyo, president of the open-banking advocacy group Open Finance Network Canada, said any phase-out of screen scraping needs to happen slowly because of how entrenched the practice has become. “This isn’t something you can just rip and replace for millions of Canadians,” she said, adding that a broad screen-scraping ban “would effectively create ‘closed’ open banking.”

The document that The Logic obtained is not a final draft of the act. In an email, Finance Canada official Marie-France Faucher said the department “cannot speculate as to what may or may not be included in future legislation.”

The forthcoming legislation will provide details about the types of data to which banks will be required to provide access, according to the document. Finance Canada did not answer The Logic’s questions about whether it intends to phase out screen scraping of all financial data—not just data covered by open banking—or about its proposed timeline.

At a May event hosted by the law firm Gowling WLG, lawyer Parna Sabet-Stephenson asked Finance Canada associate assistant deputy minister Julien Brazeau if the government plans to ban screen scraping. Brazeau said a prohibition on the practice could encourage people to use open banking, since the alternative data-access method would no longer be available. But he is concerned about disrupting businesses that rely on it. “It’s a conversation that we want to have,” but “it will be a gradual approach,” he said.

The Canadian Bankers Association supports a screen-scraping ban. Banks have a history of rocky relations with screen-scraping aggregators. In 2021, TD Bank’s U.S. subsidiary settled a lawsuit against Plaid after accusing the San Francisco-based fintech of using TD’s logo to trick customers into handing over their login credentials so it could screen scrape their data.

A screen-scraping ban could threaten the viability of a broad array of firms. Much fintech lending to small businesses, for example, relies on screen-scraped cash-flow data to determine eligibility. Fintech apps that let users track the progress of their investments among multiple accounts, manage their spending and track their net worth could cease to function if open banking doesn’t require banks to provide the data their apps use to work.

In an interview with The Logic, Sabet-Stephenson, the Gowling lawyer, said the government must balance improved security with encouraging innovation as it mulls how to address screen scraping. “Until the rules are such that we have covered all the products and services that Canadians have come to rely on, it would not be reasonable to fully prohibit it,” she said.

Banning screen scraping would make Canada an outlier among countries that have adopted open banking. The U.S., which introduced an open-banking framework in late October, and the U.K., which has had open banking for eight years, both continue to allow the practice.

Saba Shariff, chief strategy officer at Symcor, an open-banking software provider owned by a consortium of Canadian banks, said a screen-scraping ban would only work if open banking provides access to a wide variety of high-quality data. Assuming it does, however, an eventual ban could be “a good and bold move”—and easier to implement in Canada, with its highly concentrated banking sector, than in other countries, she said.

Another difference with the U.K. will be that in Canada, all firms other than federally regulated financial institutions and credit unions will be subject to a full accreditation process regardless of size, according to the document. In order to become accredited, companies will have to set up an internal complaints process, as well as become a member of a designated external complaints organization for the federal financial sector, it says. Future regulations will lay out the full requirements for accreditation, according to the document.

Beyo said she was concerned this and other costs of accreditation could price all but the largest fintechs out of the process. “Without tiered accreditation, Canada risks becoming exclusionary,” she said.

Beyo had praise for other elements of Finance Canada’s plan as laid out in the document. She said she was glad to see that the largest banks will be required to start sharing their data first, and that liability in the event of a security breach will rest with the firm that had control of the data at the time. “There are several encouraging steps forward,” she said.

Finance Canada has said it aims to launch the first phase of open banking in 2025. Beyo said she’s glad the framework is moving forward, but is frustrated with the pace and the questions that remain. “What we need now is a date, a mandate and a clear roadmap.”