Currently, there are many different definitions of open banking in our industry. Depending on the motivations of the reviewer, it can be defined as “an attempt to democratize financial data exchange by allowing access to a consumer’s banking and financial data.” Others will call it a “standardized approach to financial data exchange, where financial institutions have the ability to secure and control exchange of data.”
Regardless of motivations, the term “open banking” refers to the ability to share data through APIs (Application Programming Interfaces), thereby allowing third-party services access to a credit union’s member data — financial or otherwise. This, in turn, serves to answer members’ needs in third-party apps.
A good example of this is allowing PayPal’s P2P app, Venmo, access to credit union members’ financial data for easier access to funds, or even authentication into the app and subsequent initiation of P2P transfers. There are many other examples of the fintech world requiring access to consumers’ banking data to provide a better user experience in the applications that members use.
Ultimately, credit unions must determine their willingness to open up access to their member data for third-party apps – thereby providing digital experiences to members that are not offered or controlled by the credit union.
continue reading »