What is API Open Banking?
API open banking is simply the technology that lets apps talk to your bank—securely and with your permission. When you connect your bank account to a budgeting app or make a payment directly from your account, an API (Application Programming Interface) makes that possible.
Think of an API as a secure translator. Your banking app speaks one language, your bank's systems speak another. The API translates between them, ensuring only the right information passes through.
🎯 Simple Analogy: APIs are Like Bank Tellers
Imagine a bank teller who only answers specific questions and only to people you've approved. An API works the same way: it sits between apps and your bank data, only sharing information you've permitted. The teller (API) never gives out your vault combination (password)—just the answers to approved questions like "What's my balance?" or "What did I spend last month?"
How API Banking Works: 6 Simple Steps
You Choose to Connect
In an app, you click "Connect Bank Account" or "Link Your Bank". The app shows you exactly what data it wants to access.
You Log Into Your Bank
You're redirected to your bank's official login page. You enter your credentials there—not in the third-party app.
Your Bank Asks Permission
Your bank shows exactly what the app is requesting: "View your balance? View transactions for 90 days?" You approve or decline.
A Secure Token is Created
Your bank creates a special key (token) that lets the app access only what you approved. The app never receives your password.
The App Fetches Your Data
Using the token, the app requests your data through the bank's API. The bank verifies the token and sends back the permitted information.
You Stay in Control
You can revoke access anytime through your bank's app or website. The token stops working immediately.
What Can Banking APIs Do?
Here are the most common ways banking APIs improve your financial life:
Check Your Balance
Apps like Mint or Emma use banking APIs to show all your account balances in one place. Instead of logging into 5 different bank apps, you see everything at once.
Examples: Mint, Emma, Cleo, Yolt
Track Spending
Banking APIs let apps categorize your transactions automatically. They can see "Amazon £29.99" and tag it as "Shopping" without you typing anything.
Examples: YNAB, Money Dashboard, Copilot
Get Faster Loans
Lenders use APIs to verify your income instantly from bank statements. No more uploading PDFs—they read your transaction history directly (with permission).
Examples: Klarna, Affirm, ClearScore
Pay Without Cards
Payment APIs let you pay directly from your bank account at checkout. Faster than card payments, lower fees for merchants.
Examples: TrueLayer Pay, Volt, Banked
Verify Identity
Instead of uploading ID documents, some services verify you using bank data—your bank already knows who you are.
Examples: Plaid Identity, Tink Identity Check
Sync with Accounting
Small businesses connect their bank to accounting software. Transactions import automatically—no manual entry.
Examples: Xero, QuickBooks, FreeAgent
Is API Banking Safe?
Yes—and here's why APIs are actually more secure than older methods:
Learn More
Frequently Asked Questions
In banking, API (Application Programming Interface) is software that allows different applications to communicate with bank systems. It acts like a secure messenger between your banking app and the bank's servers. When you check your balance in a fintech app, an API retrieves that information from your bank without sharing your login credentials with the app.