The Ultimate Guide to Open Banking

Date: 06 September 2021

Digital services at their best – that’s Open Banking.

It’s simple, secure and provides big benefits for you and your lender.

Why? Lenders gain the ability to assess a borrower’s risk based on their financial behaviour and lifestyle, rather than simply relying on the flat snapshot of a members financial position provided by a credit reference report.

With this rich insight, lenders can make more accurate assessments and offer better loans. There are other benefits too, as you’re about to discover.

Keep reading to learn:


  • What is Open Banking
  • The many benefits of Open Banking
  • Why it’s safe and secure
  • How GMBCU makes use of Open Banking
  • Our Open Banking process


In a hurry? Jump to our Open Banking FAQ for speedy answers to your questions here.


What is Open Banking? 

Open Banking gives providers a better way to deal with your financial information. It came about as a result of the Competition and Markets Authority’s (CMA) call for reform, accompanied by ‘the second Payment Services Directive’ (PSD2) regulation for electronic payment services.

What does that mean for you? Well, all UK-regulated banks must now let you share your financial data – spending habits, regular payments, and companies you shop with – with authorised providers.

Sharing your data in this way is your choice. It can’t be accessed without your permission and you can cancel access at any time. Open Banking has many uses, from bringing about more competition to driving innovation in financial services.

But GMBCU’s core focus is using Open Banking to refine our lending process, helping us deliver:

  • More accurate information
  • Better analysis
  • Greater accessibility
  • More responsible lending

All of which has the potential to boost members’ long-term financial wellbeing. We talk more about how GMBCU intends to use Open Banking in a moment. First, let’s get clear on the benefits for you and your lender.


The many benefits of Open Banking

Benefits for you

It’s all in the name: OPEN Banking. Lenders don’t have to rely on a snapshot of your financial health. With deeper, more meaningful insight, lenders can be more sympathetic to those with lower credit scores without being irresponsible, opening up opportunities for:

  • Bespoke loan deals
  • Better rates

But not all banks will seize the opportunity to offer you fairer options. Because, at the end of the day, their focus is usually on profit.

Whereas credit unions like GMBCU will leverage Open Banking to make borrowing faster, simpler, safer, and fairer. Because our priority is affordability and protecting your financial wellbeing.

It’s why we circulate money for the benefit of the GMB community by pooling member savings and then lending to other members.

Learn more: What is a credit union and how does it work?


Benefits for lenders

Let’s be transparent: there are benefits for lenders too.

Having access to better data makes the market a more level playing field, helping banks and credit unions create more competitive options for customers.

It also saves time by reducing admin; the process is entirely digital so there’s no need to upload any documents or photo copy months of bank statements.

What’s more, it speeds up the loan decision process, so customers get faster responses to their loan applications.

Finally, Open Banking enables better background checks and ensures affordability, helping lenders fulfil their duty to regulators.


Is Open Banking safe? 

We’ve mentioned that Open Banking is safe and secure, but why, exactly?

For one thing, lenders only have access to the data needed for the service you’ve signed up for. For instance, they can’t look at your credit card statement with a specific bank if you’ve only asked a lender to look at your current account.

And they can only see bank statements. It’s not more information – it’s just different in the way it’s analysed and presented.

Providers using Open Banking must also comply with data protection rules such as GDPR. During the opt-in process, they must stipulate:

  • which data they intend to use
  • how long they’ll use it for
  • what they’ll do with it before you sign up

If this information isn’t provided or you’re ever unclear about anything, always ask for clarity before offering access to your data.


How will GMB Credit Union use Open Banking? 

Simply put, we’re going to use Open Banking to benefit our members. This will be achieved with Credit Kudos’ support.

Credit Kudos is a multi-award-winning, government-backed credit reporting agency whose mission is to provide fair credit for all. This is what GMBCU is all about – it’s a perfect partnership to help us achieve our wellbeing goals.

With members’ permission, we aim to use Credit Kudos’ Open Banking decision engine to support fairer lending.

The insights provided by Credit Kudos go beyond traditional, inflexible credit scoring. It helps us transform complex sets of data into an easy-to-use, comprehensive view of a borrower’s creditworthiness. This lets us responsibly increase loan acceptances and reduce the number of defaults.


Here’s what our Open Banking process looks like:  

  1. GMBCU asks a member for access to Open Banking to support their loan application
  2. The member consents and is fully supported while access is set up by Credit Kudos
  3. Credit Kudos takes the snapshot of the members’ financial transactions and history and summarises it in a report
  4. Credit Kudos instantly sends the report back to GMBCU
  5. GMBCU then makes a loan decision based on the information obtained from a number of sources including open banking, credit reference reports etc.


All that’s required from you is your permission. You don’t need to upload any documents and the process is completed in a few minutes.  

Credit Kudos is FCA regulated. Rest assured your data is protected to the highest degree.

If you apply for a GMBCU loan, we’ll give you the opportunity to securely share your bank statement via Open Banking. The choice to share more information is yours.

There’s no right or wrong decision. But it’s worth noting that the traditional loan assessment route takes longer and gives us less information to make fairer decisions that ensure affordability for our members.


Open Banking FAQ

We get it – that’s a lot of information to digest! Here’s a FAQ providing answers to your most common questions on Open Banking. Use it to reinforce what you’ve learnt today.


What is Open Banking?

Open Banking is a series of reforms to the way providers (such as budgeting apps or banks) can view your financial information or assess your risk. It gives them more meaningful insight, leading to better support and fairer, more affordable deals.


What is the biggest benefit?

Access to in-depth, meaningful financial data allows for more responsible lending. While customers benefit from better deals and rates.


Is Open Banking safe?

Very – providers can only access the data with your permission and must comply with data protection rules such as GDPR regulation. They also only have access to the data required for the service you’ve signed up for. You should always be careful who you share your data with, though.


How can you check if a provider is authorised?

Use the FCA Register or the Open Banking Directory to check if a provider is authorised. It should also be clear on a provider’s website or app if they are authorised. Be wary of third-party providers that aren’t regulated, you might not be fully protected against fraud.


Do you have to use Open Banking?

No, It’s completely up to you. But weigh up the benefits before dismissing it – Open Banking can revolutionise the way you manage your money and help you unlock much better loan deals and rates.


Is it easy to opt-out?

Yes, you can cancel at any time. Your data is accessible to the lender for 90 days, but you can revoke their access during that period if you change your mind.


How will GMB Credit Union access your data?

We’ll use Credit Kudos to access your data. This third party uses government-backed Open Banking technology to help us transform complex data sets into an easy-to-use, comprehensive view of a borrower’s creditworthiness.


Will Open Banking take over credit scores?

No. Lenders currently use credit scores in conjunction with Open Banking to make more informed lending decisions. Open Banking is a key element of the decision-making process because it provides more meaningful information on a borrower’s affordability.


Does Open Banking impact your credit score?

Using Open Banking has no impact your credit score. Rather, it’s the loan application itself that can impact your score (learn more).


How has Brexit impacted Open Banking?

Technical changes have been made to the Open Banking infrastructure due to the UK’s exit from the EU. But these changes don’t affect most providers. We will update our members if the situation alters.


You’re more than a credit score 

You deserve better deals and more control over your financial health. Open Banking unlocks this for you – digital technology that doesn’t treat you like a number.

At GMBCU, this is what we’re all about. Providing our members with a service that enhances their lives. With Open Banking, we can provide safer, faster, and fairer borrowing options, ensuring affordability.

Got a question we haven’t covered? We’re here to help. Call us on 0161 486 1777 or send us an email at