Why Open Banking APIs Are Essential For Credit Unions

Though face-to-face interactions have always been more personal, credit union members today are leaning more towards digital interactions. Whether it's due to the pandemic or advances in technology, there is no one clear-cut cause. But it's the reality credit unions need to face and accept. For example, a recent study showed that between December 2020 and May 2021, 95% of Gen Z used mobile banking. And according to the Credit Union Journal, "70% of likely bank account applicants would prefer to submit a digital application." So whatever type of banking a credit union member is interested in, it's important for them to be able to conduct their business online if they so desire. Application programming interfaces (APIs) can help make that possible.

What are APIs?

APIs are pieces of code that allow two applications to communicate with each other. In other words, APIs serve as mediator messengers, extracting data from one place and distributing it to another. With these tools, it's possible to securely share data without having to reveal sensitive account credentials.

Here are a couple of real-life examples of APIs at work:

1. An Uber driver or rider can use Google Maps within the Uber app.
2. A business posts a blog, which can then be shared to Instagram, Facebook, Twitter, or another social media platform.

What is Open Banking?

Open banking gives third-party financial service providers access to consumers' financial information by using APIs. Providers then use consumer data to do a variety of things, from transferring money in and out of their accounts to offering personalized financial services.

The Benefits of Open Banking APIs

Although it takes time and planning, API connections can be an excellent and seamless way to amplify your credit union's digital strategy. Your members want simple, fast, and convenient banking services. APIs help you provide just that through interconnection, letting you and your members access data or capabilities without wasting time or money. 

APIs can increase the scope of digital banking functionalities outside of your existing products and services. Overall, APIs can empower credit unions to develop accommodations and offer data-driven, tailored services--whether the member wants to pay off their auto loan, transfer funds, or complete another banking task.

Establishing the Framework of the Future

Today's credit unions must acknowledge the incoming digital-obsessed generation and work to wow them with speed, convenience, and simplicity. With rapidly growing digital technology, the time is now for CUs to investigate API connections and start using them to their advantage. The goal should be to develop partnerships that offer the most value to your members.

Is your CU ready to explore third-party integration using APIs? With FLEX, you have the freedom to choose the technologies you want. Check out our Core Integrations Guide to learn more about how we can help you offer the services your members need.

In addition, digital transformation, including open banking APIs, is the framework for modern credit unions. Download our report, The Value of New Technology, to learn why.