Screen scraping in loans – how is creditworthiness verified?
October 13, 2019
Online loans are largely based on modern technologies to ensure the fastest and easiest way to request and receive money. It is no wonder then that the formalities related to obtaining financing are increasingly automated. One of the eagerly used technologies is screen scraping used to verify the identity of borrowers. What does this technology consist of, what does it mean for the client and how (and if at all) can it affect transaction security?
Screen scraping – a way to obtain customer data
Screen scraping is an IT technique that allows automatic and impersonal reading of information from transactional systems – such as electronic banking offered by banks. The program that will obtain the appropriate data – login and password – can log in to the account itself and even perform operations on it, but only passively. We are talking about downloading the account holder’s personal data and transaction history.
What does screen scraping have for payday loans?
In order for a loan company to grant a loan, it must first determine to whom it actually lends money. Considering the completely online loan procedure, this is a difficult task and gives space for extortion and creating obligations on other people’s data, for example from a lost ID card. It is therefore necessary to verify your identity, which is most effective if you use a bank account. Therefore, the most common way of confirming your identity is to make a verification transfer for a small, symbolic amount from your individual bank account, the number of which was entered in the loan application. The lender assumes that only the applicant has access to detailed personal data (such as the number and series of ID cards) and to electronic banking. On this basis, he also concludes that it is actually the person who wants to take out the loan.
There is another way of getting more popular verification, in the form of using a quick application. The most common programs of this type are Installor, Cortomatik and LifeConnect. They all work on a similar principle – the customer provides their login and password for electronic banking, which gives the program access to the account and downloads the necessary data.
What are the benefits of using screen scraping?
The biggest advantage of using the application is that the verification carried out in this way takes place very quickly. If you confirm your identity by bank transfer, you will have to wait for it to be posted, as only after that a loan decision may be issued. The speed of verification will therefore depend on the schedule of bank sessions, especially since most companies do not accept Blue Cash express transfers.
Quick verification using screen scraping is not only a confirmation of the borrower’s identity, but also a tool that helps in analyzing creditworthiness – the customer does not have to provide any documents confirming their income, as the application will do. In this way, a loan decision can be issued almost immediately, usually after 15 minutes.
Speed and convenience, but is security?
A lot of controversy has arisen around screen scraping, especially regarding the security of borrowers. The concerns relate primarily to the possibility of obtaining client’s personal data and full access to the bank account by unauthorized persons. Doubts are also expressed by the borrowers themselves, who, acting in accordance with the principle of limited trust, are afraid that they may be robbed of savings accumulated on the account, and because they provided their login and password to the account, the bank will not recognize and will not compensate them losses. There are also doubts about the collection of data that is not necessary to carry out the transaction (e.g. private purchasing expenses). Similar concerns are also raised by the external platform for Blue Media express transfers – see: ” Are transfers carried out by Blue Media safe?”.
There is nothing to fear, however. Screen scraping is a fully automated system that works only on the basis of the authorization granted by the borrower and only to the extent to which the lender has agreed. As we have already mentioned, it is an impersonal process, i.e. it does not require the participation of physical individuals. It is therefore not possible for any person to acquire customer data.
What’s more – the data obtained is only one-off. They are neither stored nor processed, and thanks to SSL encryption, the application only logs in with the data provided by the customer, but it cannot be viewed. The exception is of course the account statement, which will be processed, although only for the purpose of examining creditworthiness.
Screen scraping used by trusted lenders
The security of this technology can be demonstrated by the fact that it is used by the largest and most reliable loan companies, such as LendUp, ExtraPen, Taplo, Coinman, Ponga, Niloan or Wellow Finance. So far, despite many fears and quite a long period of use of this technology, there has been no incident and probably will not happen – the security used by verification applications are exactly the same as in electronic banking, which is used by many people every day. In such cases, it is not technology and man is the weakest link.