Open banking – a simple concept with far-reaching impact

It’s a fairly straightforward concept. The phrase “open banking” describes the technology to enable a member’s account information, transaction history, and related financial data to be shared with other institutions.

It works through the use of application programming interfaces – APIs. While we won’t get into inner workings, the open banking concept appears to be a significant source of financial innovation, perhaps enough to reshape the retail financial industry.

Attractive benefits and positive member implications are associated with open banking

For example, a CU would be able to compare a member’s accounts and transaction history across institutions. This analysis could lead to new service options or beneficial account changes for the member.

Right now, the act of moving one’s checking account to another institution is a tedious, error prone, and time-consuming process. It should improve dramatically under open banking. This fact alone could generate lots of enthusiastic member support for open banking.

An API could be programmed to do a deep analytic dive into member transaction data. The goal would be to identify better products and services for them. Perhaps a deposit account with a higher interest rate or a credit card with better features.

Another app might use voice commands to help visually impaired members better understand their finances and do more of their own transactions. And open banking should improve fraud detection because it’ll be easier to monitor accounts. This would make it easier to identify potential problems and address them sooner.

Shared account information could revamp lending processes to benefit members

Since CUs will have access to a fuller, more-accurate picture of a member’s overall financial situation and risk profile, they may be able to offer better loan terms.

In the same way, open financial data could help members get a better picture of their own finances before they apply for a loan. Specifically, an open banking app for members who are looking for a home could automatically calculate what they can afford based on all their financial information. This API-based approach may provide a more reliable picture of borrowers than current traditional mortgage lending guidelines do.

Open banking means better member service, stronger relationships, and better member retention

It should be fairly straightforward. After CUs help members understand and manage their finances better, members will quickly see their CU as much more than a place where they do simple transactions. The net outcome is they’ll be more reluctant to switch institutions.

On the downside, broader data sharing could lead to risk of financial fraud

As always, no new technology is 100% foolproof. Open banking could pose significant risks to member financial privacy and data security. For example, there’s potential for a malicious third-party app to clean out a member account. To be sure, this would be an extreme and unlikely threat. But it is a threat.

The more realistic concerns include breaches due to poor data security, hacking, or insider threats. These types of threats will likely become more common as personal financial data continues to be aggregated and interconnected in new ways.

MemberPass digital ID plays a necessary role in open banking

It’s highly probable the increased data sharing associated with open banking will lead to increased risk for all types of financial fraud. And of course, as members follow new open-banking processes, they’ll need to identify and authenticate themselves at every step. Unfortunately, every time your CU authenticates someone, regardless of the channel or purpose, there’s imposter risk, risk of identity theft, and more.

MemberPass can give you confidence and certainty in an open banking environment

MemberPass digital ID is an unhackable encrypted connection between you and a member. It delivers unmatched safety and security. When members ID themselves with MemberPass, you can be certain they are who they say they are.


With MemberPass in place, even in an open banking environment, all forms of financial fraud are virtually eliminated.

If you haven’t already added MemberPass to your credit union, we’d be happy to arrange a personal demo

Seeing is believing, and you can email us to set up your own demo. You can also register to attend a MemberPass webinar or visit us online at to find out more.

The convenience, security, and fraud-fighting power of MemberPass should be part of every member’s financial wellness profile. The sooner you adopt the program, the sooner your members will enjoy the direct benefits!

Bonifii, a credit union service organization, offers MemberPass, a simple, secure, and convenient form of member identity verification. MemberPass, a self-owned, digital ID, provides convenient access to financial accounts while the members keep control of their private personal information. We leverage touchless technology to protect you and your members. Visit or email