With the appropriate permissions in place, they can be used to:
- access account information,
- initiate payments, or
- use financial data to develop new digital services.
In Europe, this model is closely linked to PSD2, to providers such as AISPs (Account Information Service Providers) and PISPs (Payment Initiation Service Providers), and to security and authorization mechanisms such as SCA and OAuth 2.0.
The regulatory framework continues to evolve with PSD3 and the new Payment Services Regulation (PSR).
In this guide, we explain what open banking APIs are, how they work, the different types available, their key benefits and use cases, and what an organization needs to implement them securely and at scale.
What are open banking APIs?
An open banking API is an interface that allows a bank to expose specific data or capabilities for use by authorized third parties.
Rather than providing direct access to internal systems, the API acts as a controlled communication layer between the bank and the application requesting the service.
For example, it can be used to:
- check balances and transactions,
- aggregate information from multiple accounts,
- initiate payments,
- verify financial information,
- automate reconciliation or treasury processes.
APIs are one of the core technological enablers of open banking, allowing banks, fintech companies and other platforms to collaborate without compromising security or control over data.
How do open banking APIs work?
Although the exact architecture varies from one project to another, the process can be summarized in five steps.
1. The user requests a service
A customer uses an application that needs to access banking information or perform an action, such as viewing several accounts in one platform or initiating a payment.
2. The user gives consent
Access must be limited to the authorized data and operations. Consent management defines:
- who can access it,
- what information they can access,
- for what purpose, and
- for how long.
3. Access is authenticated and authorized
The financial institution verifies the identity of both the user and the provider.
In Europe, mechanisms such as Strong Customer Authentication (SCA) and technologies such as OAuth 2.0 are used to grant access without requiring users to share their banking credentials directly.
Where stronger security is required, these mechanisms are reinforced with FAPI (Financial-grade API), an OpenID Foundation standard that strengthens OAuth 2.0 and OpenID Connect specifically for high-risk APIs such as those used in financial services.
Identity and Access Management (IAM) is particularly important for controlling identities, roles and permissions.
4. The application sends the request
The authorized provider requests the required information or action.
The bank’s infrastructure checks permissions, security policies and usage limits.
5. The bank responds
If the request meets the defined conditions, the API returns the data or performs the requested action.
This enables faster, standardized and traceable machine-to-machine communication.
Types of open banking APIs
The most common types are:
Account information APIs (AIS)
These APIs provide access to accounts, balances and transactions.
They form the basis of financial aggregators, treasury tools and personal finance applications.
Payment initiation APIs (PIS)
These APIs allow a payment to be initiated from the user’s account with their authorization and support account-to-account payment models.
Funds confirmation APIs
These APIs can confirm whether an account has sufficient funds for a transaction without exposing more information than necessary.
Identity and verification APIs
These APIs can help verify data associated with an account or its holder and streamline onboarding processes or certain KYC (Know Your Customer) checks.
Financial institutions can also develop premium APIs to provide additional capabilities to partners, fintech companies or business customers.
Key benefits of open banking APIs
The value of these interfaces lies not only in opening up data, but in the services they make possible.
Innovation and faster time to market
Organizations can reuse existing financial capabilities to launch new services without building the entire infrastructure from scratch, while accelerating integrations with partners.
Better digital experiences
Users can:
- view multiple accounts,
- automate checks, or
- initiate payments through smoother digital experiences.
Process automation
APIs can:
- connect banks with ERP systems,
- treasury platforms,
- accounting tools or other business systems, and
- reduce manual work.
New collaboration models
Banks and fintech companies can build services together.
When APIs are managed as digital products, they can also enable Banking as a Service and embedded finance models.
Explore our Banking and Finance solutions
Open banking API use cases
Some of the most relevant applications include:
- Financial aggregation: display accounts from multiple institutions in a single platform.
- Corporate treasury: integrate banking information with internal systems.
- Account-to-account payments: initiate payments directly from an account.
- Automated reconciliation: match bank transactions against invoices or incoming payments.
- Credit scoring and lending: use authorized transactional data in assessment processes.
- Onboarding and verification: streamline checks related to accounts and identity.
These examples show why open banking has moved beyond being seen purely as a regulatory requirement and has become part of the digital strategy of many financial institutions.
Security in open banking APIs
Opening financial capabilities to third parties requires a robust architecture. Key elements include:
- authentication and authorization;
- encryption;
- consent management;
- permission controls;
- rate limiting;
- traceability and monitoring;
- API lifecycle governance.
Many of these capabilities rely on open standards such as OAuth 2.0, OpenID Connect and FAPI, which define authentication and authorization best practices for high-risk APIs.
The API Gateway plays a central role here by enforcing access policies, protecting backend services and controlling traffic.
As a result, open banking initiatives are often closely tied to a broader API Management strategy.
Don’t miss our article: API Management: What It Is, Key Components and How It Accelerates Your Business
Global adoption of FAPI
Although Europe was a pioneer in formalizing these security standards, FAPI is now a regulatory reality in markets around the world:
-
Europe:
The European framework continues to evolve. Following the provisional agreement reached by the European Parliament and the Council in November 2025, PSD3 and the PSR continued to progress in 2026 with measures aimed, among other goals, at reducing barriers to open banking services and strengthening how user permissions are managed.
The current status of the initiative is available on the European Parliament website.
-
Latin America
- Brazil: the country has the region’s largest and most advanced open finance ecosystem, regulated by the Central Bank of Brazil (BCB). FAPI certification is mandatory for all participating institutions.
- Colombia: it has taken the most concrete step after Brazil. The Financial Superintendence explicitly requires compliance with the FAPI 2.0 framework under External Circular 004 of 2024, with implementation deadlines already under way.
- Mexico: a regional pioneer with its 2018 Fintech Law, the country has not yet published the transactional data regulations that would trigger effective FAPI adoption. For now, its framework covers open and aggregated data.
-
Asia-Pacific and the Middle East
- Australia: the country built its Consumer Data Right (CDR) on FAPI 1.0 Advanced and now requires FAPI 2.0 for higher-scope accreditations.
- Saudi Arabia (SAMA), Bahrain (CBB) and the United Arab Emirates (CBUAE): these markets have incorporated FAPI as a mandatory security certification in their national open banking and open finance frameworks, with Bahrain leading the region since 2018.
What does an organization need to implement open banking?
Publishing an API is only one part of the project. Organizations also need to address integration, security, governance and the experience of API consumers.
An integration strategy
Financial institutions typically operate a mix of core systems, modern applications, cloud environments and legacy platforms.
An integration strategy connects these environments without creating point-to-point integrations that are difficult to maintain.
Interoperability is also essential to ensure that systems can exchange information reliably.
Keep reading: Enterprise Interoperability: Definition, Importance and How to Implement It
API Management and governance
As the number of APIs, partners and consumers grows, organizations need to control how APIs are designed, published, documented, versioned and retired.
An API Management strategy can include:
- API Gateway,
- Developer Portal,
- security,
- traffic management,
- analytics, and
- lifecycle management.
Beyond reducing risk, this helps turn APIs into reusable assets.
Developer experience
Even a technically sound API may see low adoption if it is difficult to consume.
Clear documentation, examples, a sandbox and a well-designed Developer Portal reduce friction and encourage adoption.
From open banking to open finance
The next step is open finance. While open banking has developed mainly around payment accounts and banking services, open finance extends the logic of secure, consent-based data sharing to a broader range of financial products and services.
For financial institutions, this evolution reinforces the idea that APIs should be treated as a strategic capability for connecting ecosystems and developing new services.
Turning open banking APIs into a strategic capability
Open banking APIs enable organizations to:
- connect banks,
- fintech companies,
- businesses, and
- applications so they can exchange data or execute services securely.
The real value emerges when these APIs sit within a governed, scalable architecture that is built to evolve.
That is why an open banking initiative should include:
- integration,
- API Management,
- IAM,
- security,
- observability, and
- lifecycle management by design.
At Chakray, we help organizations design and implement integration ecosystems and API Management solutions that connect legacy systems with new digital services while maintaining control, security and scalability.
Contact our team for expert guidance!
Frequently asked questions about open banking APIs
What is an open banking API?
It is an interface that allows authorized applications and providers to securely access specific banking data or services under defined conditions and permissions.
What is the difference between an AISP and a PISP?
An AISP provides services based on account information.
A PISP initiates payments from an account on the user’s behalf and with their authorization.
Are open banking APIs secure?
They can be, provided they are implemented with appropriate authentication, authorization, encryption, identity management, consent, API Gateway, monitoring and governance controls.
How are PSD2 and open banking related?
PSD2 drove regulated access in Europe for authorized third parties to certain services and information associated with payment accounts.
The framework is now evolving toward PSD3 and the PSR.
What is the difference between open banking and open finance?
Open banking focuses mainly on banking services and data related to accounts and payments.
Open finance extends this model to a wider range of financial products and data.
