What are open banking APIs and how do they work?

Open banking is an ecosystem in which banks securely share customer-authorized financial data and services with third-party providers through application programming interfaces (APIs), enabling products such as budgeting tools, payment gateways, investment platforms, and buy-now-pay-later services. APIs authenticate third parties, use temporary access tokens, and return requested data or execute functions such as payments, while aggregators can simplify connections across multiple banks. Driven in part by regulations such as the European Union’s PSD2, open banking can support business automation, transaction analysis, personalized customer experiences, and financial-product innovation. Businesses can use these integrations to process payments, automate payouts, manage foreign-exchange exposure, and issue virtual cards, while firms including Airwallex, Robinhood, and Klarna use open banking for different financial services. Airwallex presents its API platform as a tool for integrating payment collection, payouts, foreign exchange, and card issuing into business workflows, while noting that the material is informational rather than legal, tax, regulatory, or investment advice.

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