What is Open Banking?
Open Banking is a shift in how financial information is shared and, more importantly, who controls it. Traditionally, your bank held all your data (account info, transactions, credit history) and kept it to itself. If you wanted to use a budgeting app, apply for a loan elsewhere, or compare financial products, you’d often have to manually share documents or log in to multiple systems. It wasn’t exactly seamless.
Open Banking changes that. It puts the customer in charge of your own financial data. With your permission, banks can securely share selected information with other apps, platforms or financial services via APIs (Application Programming Interfaces). This opens the door to smarter tools, faster processes and better financial experiences.
Let’s say you’re applying for a loan. Instead of uploading pay slips and bank statements, you just connect your account through an authorised app. Or maybe you want a real-time overview of all your bank accounts, across different banks, in one dashboard. Open Banking makes that possible.
For individuals, Open Banking means better tools to manage money. For businesses, it means smarter services, faster onboarding, and fewer barriers to financial innovation. For banks, it’s an opportunity to stay relevant by becoming platforms instead of just providers.
How do Open Banking APIs work?
APIs, or Application Programming Interfaces, might sound technical, but the concept is simple: they’re just structured ways for different systems to exchange information securely.
In the context of Open Banking, APIs are how banks share data with approved third-party providers. And crucially, this only happens if the user gives explicit consent. No permission? No access.
Here’s how it works in practice:
You open a personal finance app and choose to link your bank account. That app doesn’t store your login details or scrape your screen. Instead, it uses the bank’s API to request access to your data. The bank verifies your identity (often through strong customer authentication), confirms your consent, and shares only the data you agreed to. Everything happens in real time, over secure, encrypted connections.
The beauty of APIs is that they’re consistent. Every provider works with the same rules, formats, and protocols. This standardisation reduces friction, prevents errors, and makes it easier to build reliable, secure services that scale.
Why Open Banking APIs matter
Open Banking APIs are valuable because of what they unlock. They enable new business models, shift customer expectations, and push the entire industry forward.
1. They put customers in control
People can choose how and where their data is used, rather than being locked into one platform. That means more transparency and more freedom to find services that fit their needs.
2. They fuel innovation
Fintechs and startups no longer need to partner directly with banks to build financial tools. With APIs, they can plug in and create everything from smarter savings apps to real-time payment solutions, all without reinventing the wheel.
3. They level the playing field
Open Banking APIs allow smaller players to compete with bigger institutions by giving them access to the same data and infrastructure. It’s not just the big banks that get to innovate anymore.
4. They push banks to evolve
With new entrants offering smoother, faster, more personalised experiences, traditional banks are being nudged to modernise: integrating APIs themselves and often becoming service platforms rather than standalone providers.
5. They enable real-time experiences
APIs make it possible to deliver financial services that feel as fast and seamless as the best digital products out there, such as instant account verification or up-to-date credit checks
What can you do with Open Banking APIs?
Once you connect to Open Banking APIs, you’re unlocking use cases that make financial services faster, smarter, and more relevant. Here are a few concrete examples of what businesses and developers can do:
1. Build real-time financial dashboards
By accessing up-to-date transaction data, you can create tools that show users where their money is going, spot patterns in spending, and even forecast future cash flow – all in real time.
2. Automate onboarding and identity checks
Instead of asking users to upload documents or wait days for manual verification, APIs allow instant access to account ownership data, speeding up KYC (Know Your Customer) processes while improving accuracy.
3. Power smarter lending decisions
With a clearer view of a user’s income and spending habits, credit risk can be assessed more precisely, making it easier to offer personalised credit options without relying on outdated models.
4. Enable seamless, direct payments
APIs can initiate payments straight from a customer’s bank account, without relying on card networks or extra intermediaries. This means faster settlement, lower costs, and fewer payment failures.
5. Personalise services based on real behaviour
You can offer customised financial advice, product recommendations, or alerts based on how people actually use their money, not just based on static profiles or assumptions.
How to keep financial and personal data safe with Open Banking APIs
When people hear “data sharing,” their first concern is often privacy. And rightly so. But Open Banking was built with security in mind from the ground up. In fact, it follows some of the strictest data protection standards out there.
Here’s how data stays safe when working with Open Banking APIs:
Consent is everything
No data is shared unless the user actively authorises it. That consent is granular (you choose exactly what’s shared) and time-limited (you can revoke it at any time).
Strong Customer Authentication (SCA)
Accessing an account through an Open Banking API typically involves two-factor authentication – not just a password, but an additional step like a device confirmation or biometric check. It’s designed to keep access strictly in the hands of the rightful owner.
Regulated players only
Third-party providers must be licensed and regulated (in Europe, by a national financial authority) to even connect via Open Banking. There’s a formal process, ongoing compliance checks, and accountability in case anything goes wrong.
No credential sharing
Because APIs are used instead of traditional login forms, you’re never asked to hand over your banking username or password to anyone. This eliminates one of the biggest security risks in older financial integrations.
Clear audit trails
Every data request, every access token, and every interaction is logged, making it possible to track activity and detect anomalies quickly.
How Near Partner supports your open banking journey
Open Banking and APIs create opportunities, but they also come with technical and strategic challenges. That’s where Near Partner steps in, offering tailored expertise for every player in the ecosystem.
For companies building Open Banking APIs
Creating robust, secure, and scalable APIs is no small feat. Near Partner can help you in:
- Designing API architectures that fit your business needs and evolving regulations.
- Ensuring smooth integration with existing banking systems, reducing disruptions.
- Implementing robust security protocols to protect sensitive financial data while enabling authorized access.
- Setting up automated testing and monitoring so APIs stay reliable and performant.
- Providing ongoing maintenance and rapid adaptation as open banking standards evolve.
For banks preparing for Open Banking
Opening your data requires rethinking how your data is managed and shared. Near Partner helps banks:
- Clean and structure data to meet regulatory quality standards.
- Build secure, efficient data pipelines to feed APIs with accurate, up-to-date information.
- Modernize legacy systems in a way that speeds up open banking readiness without business interruptions.
- Develop governance models that protect customer privacy and give you control over data sharing.
- Train internal teams on API management best practices for ongoing success.
This approach reduces risk, speeds time-to-market, and positions banks as trusted, agile market players.
For companies building applications on Open Banking APIs
If your business relies on open banking APIs to create new services, Near Partner can help by:
- Mapping out API capabilities and limitations to set achievable project scopes.
- Designing seamless user journeys that leverage real-time financial data effectively.
- Developing integrations that combine multiple APIs into cohesive, reliable workflows.
- Offering flexible, iterative development so your application can evolve with changing APIs and market demands.
- Providing monitoring and troubleshooting support to keep your services running smoothly.
Unlock API and Open Banking with Near Partner
You already know API and Open Banking are here to stay. The challenge now is building with them in a way that’s secure, compliant, and genuinely useful. If you’re looking for a partner who can help you build or make the most of API and Open Banking, we’re here.
