What is an Open Banking API?
An Open Banking API (Application Programming Interface) is a standardized way for banks to securely share customer financial data with authorized third-party providers (TPPs). These APIs act as digital bridges that allow different financial systems to communicate, enabling innovative services like account aggregation, instant payments, and personalized financial management.
Before Open Banking APIs, accessing bank data required screen scraping—a fragile and insecure method where applications logged into banking websites using customer credentials. APIs provide a secure, standardized alternative with proper authentication, consent management, and data protection.
Key Characteristics of Open Banking APIs
- Secure — Use OAuth 2.0 and Strong Customer Authentication (SCA)
- Standardized — Follow specifications like UK Open Banking, Berlin Group, or FDX
- Consent-based — Customers explicitly authorize data access
- Read and Write — Support both data retrieval and payment initiation
- Regulated — Governed by frameworks like PSD2, Section 1033, or CDR
How Open Banking APIs Work
Open Banking APIs follow a standardized flow that ensures security and user consent at every step. Here's how a typical API interaction works:
User Initiates Request
A customer wants to connect their bank account to a fintech app (e.g., for budgeting or payments).
Redirect to Bank
The app redirects the user to their bank's secure authentication page using OAuth 2.0.
Strong Customer Authentication
The user authenticates with their bank using SCA (typically password + SMS code or biometrics).
Consent Grant
The user reviews and approves what data the app can access (accounts, transactions, balances).
Token Exchange
The bank provides the app with access tokens that authorize specific API calls.
API Data Access
The app uses these tokens to securely retrieve data or initiate payments via the API.
Types of Open Banking APIs
Open Banking APIs are categorized based on their functionality. Understanding these types helps you choose the right APIs for your use case.
Account Information Services
AIS / AISPRead-only access to account data including balances, transactions, and account holder information. The foundation for aggregation services.
Payment Initiation Services
PIS / PISPAbility to initiate payments directly from a customer's bank account. Enables bank-to-bank transfers without card networks.
Confirmation of Funds
CoF / CBPIIVerify that sufficient funds are available in an account before completing a transaction. Returns a simple yes/no response.
Variable Recurring Payments
VRPAllow authorized payments of varying amounts on a recurring basis with a single consent. The next evolution of direct debits.
Beyond these core types, banks are increasingly offering specialized APIs for:
- Identity Verification — Verify customer identity using bank-held KYC data
- Product APIs — Access information about banking products (accounts, loans, cards)
- Event/Webhook APIs — Real-time notifications for account events
- Consent Management APIs — Manage and revoke data sharing permissions
💡 Explore Banking APIs
Our API directory tracks 3,400+ banking APIs from financial institutions worldwide, including their documentation, sandbox availability, and supported features.
Browse API Directory →Open Banking API Standards & Regulations
Open Banking APIs are governed by regulatory frameworks and technical standards that vary by region. Understanding these is crucial for compliance and interoperability.
Major Regulatory Frameworks
PSD2 / PSD3 (Europe)
EU's Payment Services Directive requires banks to provide API access to licensed TPPs. PSD3 (upcoming) expands scope and strengthens requirements.
View PSD2 details →UK Open Banking
CMA-mandated framework with specific API standards. Highest adoption rates globally with 7+ million users.
View UK framework →Section 1033 (USA)
CFPB rule establishing consumer rights to access and share financial data through standardized APIs.
View US regulations →CDR (Australia)
Consumer Data Right extends beyond banking to energy and telecom sectors with reciprocal data sharing.
View CDR details →Technical API Standards
- UK Open Banking Standard — RESTful API specification used in UK and adopted by many other markets
- Berlin Group NextGenPSD2 — European standard providing flexibility across different implementations
- STET PSD2 API — French banking standard also used in parts of Europe
- Polish API — Polish Banking Association's PSD2 API standard
- FDX (Financial Data Exchange) — US standard emerging as the leading specification for Section 1033
- Open Finance Brasil — Comprehensive Brazilian standard covering banking, insurance, and investments
Upcoming: FIDA (Financial Data Access)
The EU's upcoming Financial Data Access regulation will extend Open Banking to mortgages, pensions, investments, and insurance—creating true Open Finance. Expected to come into effect around 2026-2027.
Open Banking API Providers
There are two main approaches to accessing Open Banking APIs: connecting directly to bank APIs or using an API aggregator that provides unified access to multiple banks.
Direct Bank APIs vs API Aggregators
| Aspect | Direct Bank APIs | API Aggregators |
|---|---|---|
| Coverage | Single bank | Hundreds to thousands of banks |
| Integration effort | High (per bank) | Low (single integration) |
| Data normalization | Manual | Handled by aggregator |
| Maintenance | You handle changes | Aggregator handles |
| Cost | Usually free | Per-API-call or subscription |
| Control | Full control | Dependent on aggregator |
| Best for | Single-bank apps | Multi-bank connectivity |
Featured API Aggregators
API aggregators provide unified access to multiple banks through a single integration. Here are some leading providers:
BankingSDK
BanqUP
Basiq
Belvo
Focus: Latin America
Bridge
Budget Insight
Dapi
enable:Banking
How to Integrate Open Banking APIs
Integrating Open Banking APIs requires understanding authentication flows, handling consent, and implementing proper error handling. Here's a step-by-step guide:
Step 1: Choose Your Approach
Decide between direct bank integration or using an aggregator based on your coverage needs and development resources.
Step 2: Get Registered
- For direct bank access: Register with bank developer portals and obtain API credentials
- For regulated access (AIS/PIS): Obtain necessary licenses (AISP/PISP) or partner with a licensed provider
- For aggregators: Sign up for developer accounts and get API keys
Step 3: Implement OAuth 2.0 Flow
Open Banking APIs use OAuth 2.0 for authorization. You'll need to implement:
- Authorization endpoint redirect for user consent
- Callback handling for authorization codes
- Token exchange (authorization code → access token)
- Token refresh mechanism for long-lived access
Step 4: Handle Strong Customer Authentication (SCA)
PSD2 requires SCA for account access. Your integration must support redirect-based authentication where users verify their identity with their bank (typically using two factors like password + SMS/biometrics).
Step 5: Test in Sandbox
Most banks and aggregators provide sandbox environments with test data. Thoroughly test all flows before going live, including error scenarios and edge cases.
Best Practices for Integration
- Implement proper error handling for API rate limits and downtime
- Cache tokens securely and implement refresh logic
- Store minimal data and implement data retention policies
- Provide clear consent screens explaining data usage
- Monitor API health and set up alerting for failures
Benefits of Open Banking APIs
For Fintechs & Developers
Build innovative financial products without banking licenses. Access real banking data for better user experiences, faster onboarding, and personalized services.
For Consumers
Control your financial data. View all accounts in one place, get better loan rates through data sharing, and enjoy seamless payments without card details.
For Banks
Become a platform, not just a provider. Partner with fintechs, create new revenue streams through premium APIs, and improve customer engagement.
For Businesses
Streamline payment collection with lower fees than cards. Automate reconciliation with direct account access. Improve cash flow with instant payments.
Frequently Asked Questions
An Open Banking API (Application Programming Interface) is a set of protocols that allows third-party financial service providers to securely access banking data and initiate payments with customer consent. These APIs enable banks to share customer account information, transaction history, and payment capabilities with authorized fintech applications, creating an interconnected financial ecosystem.
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