What is an Open Banking API?

Open banking APIs are changing how we build and use financial services. The number of open banking Application Programming Interface (API) calls is forecast to grow from 137 billion in 2025 to 722 billion in 2029 – a 427% increase. Europe continues to lead the way, with a growing number of regulated third-party providers driving widespread adoption.

If you’ve ever used an app to view your balance, set a budget, or send money from your bank account, you’ve likely used an open banking API without realising it. These APIs are now critical to the financial ecosystem – powering faster payments, better user experiences, and more competitive products.

In this guide, we’ll break down what open banking APIs are, how they work, why they matter, and how Noda’s open banking API helps businesses connect with banks and deliver secure, real-time financial services.

What is an Open Banking API?

An open banking API is a secure tool that allows banks to share financial data with approved third-party providers like budgeting apps, payment platforms, or financial services with the customer’s consent.

Rather than asking users to manually input data or share login credentials, these APIs let apps connect directly to a user’s bank, retrieve the exact information they’ve authorised, and complete tasks like checking balances, verifying accounts, or making payments.

Everything happens through a controlled and encrypted connection. The bank handles authentication, permissions are clearly defined, and access is limited to specific data. It’s a safe, standardised way to connect different financial services giving users more control, and businesses better tools to work with.

How Open Banking API Works

Open banking APIs allow third-party applications like budgeting tools, payment platforms, or financial dashboards to securely connect with a user’s bank account, with permission. Instead of sharing login details, users authorise access through their bank, creating a safe and controlled data exchange.

Banks expose secure API endpoints that let these apps request specific data, such as account balances, transaction history, or account verification. Once the user gives consent, the bank issues a secure token to the app, which allows access only to the information that was authorised – nothing more.

In many cases, businesses work with open banking providers like Noda to simplify this process. Rather than building and maintaining individual connections with every bank, they integrate once with Noda’s API, which connects them to a wide network of banks across multiple markets. This means they can offer account-to-account (A2A) payments, identity checks, and real-time data services with a single integration.

Here’s how a typical connection works:

1. A user selects their bank and approves access through a secure redirect.
2. The bank verifies their identity and issues an encrypted token.
3. The token is used to perform authorised actions –like fetching balance data or initiating a payment.
4. Data updates happen in real-time, so apps always reflect the most current information.

This process ensures full compliance with local regulations, including PSD2 in Europe, and prioritises security, transparency, and user control at every step.

How to Use an Open Banking API

Open banking APIs make it easier to build secure, user-friendly financial services. The process starts with customer consent. From there, your app connects to their bank through a regulated open banking API platform.

The bank authenticates the user and issues a secure token that grants access to approved data like checking balances or initiating payments. It’s a fast, reliable way to offer modern financial features without handling sensitive login details.

Benefits of Open Banking API

For Customers

It enables personalised, real-time financial experiences. Users benefit from:

• Tailored services driven by up-to-date financial behaviour
• Full control over who accesses their financial data and why
• Faster processes such as loan approvals and account verification
• Simplified money management through budgeting and subscription tools

For Businesses

Businesses can offer smarter, more efficient financial services. It allows them to:

• Improve credit scoring and reduce fraud risk with real-time data
• Enable low-friction checkouts through A2A payments
• Embed financial features without needing a banking licence
• Make better product, marketing, and risk decisions based on reliable insights

Why Use Open Banking APIs?

It gives businesses a smarter way to offer financial services. They’re not just for fintechs – any company handling payments, customer data, or identity checks can benefit from their speed, security, and flexibility.

Secure and Permissioned Data Access

One of the biggest advantages is secure access to financial data, always based on user consent. Customers choose what to share, and businesses only see the data relevant to their service. With protocols like OAuth 2.0 and strong encryption, everything remains protected and compliant.

Faster Processes, Fewer Bottlenecks

APIs replace time-consuming manual steps with fast, automated flows. What used to take hours, like verifying income or reviewing bank statements, can now be done in seconds. This helps reduce friction, paperwork, and errors.

Built for Scale and Adaptability

As more banks and platforms move toward API-led models, it’s easier to build modular, scalable services that adapt to changing market needs. Businesses can go to market faster and integrate with minimal development effort.

A recent global survey of senior payments professionals confirmed what many in the industry are already seeing: open banking APIs are expected. Adoption is rising fast, especially in the UK. In just six years, monthly open banking API calls grew from 1.9 million in June 2018 to over 1.6 billion by September 2024 – the highest volume recorded to date.

What Noda Offers Through Its Open Banking API

Noda simplifies how businesses connect to open banking. Through one API, companies in industries like e-commerce, travel, fintech, gaming, and digital services can access a large network of banks, offer secure payments, and build better user experiences – without the usual technical complexity. Everything is designed to be fast, flexible, and compliant with open banking API regulations.

Here’s how Noda helps bring open banking to life:

• Easy integration: Businesses can connect to over 2,000 banks across 28 countries including Europe, the UK, Brazil and Canada and go live in hours, not weeks.
• Regulated and secure: Built-in Strong Customer Authentication (SCA), data encryption, and full PSD2 compliance keep every transaction safe.
• Flexible payment tools: Noda offers Open Banking Payments and Payouts, Instant Payment Links, and No-code Checkout options.
• Frictionless user journeys: From direct bank transfers to secure bank logins, every feature is designed to speed up the customer experience and reduce drop-offs.

A Better Financial Experience with Noda

Access to financial services used to be limited by legacy systems and gatekeepers. Today, thanks to open banking APIs, consumers have more control, more choice, and more convenience than ever before.

With Noda, users can move between secure bank payments, financial tools, and digital platforms – all connected through a single API. This shift has made everyday tasks like paying online, verifying accounts, or managing subscriptions faster and more intuitive.

Open banking is no longer a concept – it’s the infrastructure behind better experiences. Noda’s API platform helps businesses unlock this potential and build products that work the way people expect them to.