What is API Banking? How does it work?

API Banking

API is one of the biggest advancements in the banking industry. API is providing businesses and individuals easy access to custom banking service with complete security and efficiency.

In nowadays the banking industry is rapidly changing with modern technologies to meet customer needs and wants.

Open Banking is a recent innovation. It includes the use of APIs that have access to the core system of a bank. Also offers to the consumers more personalized banking experience.

Let’s have a look at what banking APIs are and how they work –

API banking Services:

Application Programming Interface (API) allows a 3rd party application to use a specific interface through which it can access a common set of services. This means a bank can offer 3rd party access to its custom services through dedicated APIs. Some of the top banks in India now allow developer organisations to use their API platform and build custom APIs. From building an API, testing it, to going live, banks offer all the tools and features to the developers to build powerful and efficient APIs.

What are the different types of bank APIs?

In India, a few banks are now offering a host of banking API banking services. That consists of Accounts and Deposits, Payment Gateways, Loans and Cards, Trade Service and Business Banking.

For example, retail loans can use the API to check the CIBIL score of a customer or can verify their PAN details. A business can combine its Enterprise Resource Planning (ERP) with Application Programming Interface banking for managing their cash receivables and payables directly through their ERP.

Types of APIs at present:

  • Private API – This API is only used within the financial institution. It can boost internal processes.
  • Partner API – Partner APIs can help to greater expansion through new channels than a private API.
  • Open/public APIs – This API involves help to make business data available to third parties. Banks can use such APIs to generate additional business and grow their customer bases.

New era with API banking platform:

  • API banking platform can be used to do pay-outs to any bank account. Also, you can send money to any UPI-BHIM ID or wallet.
  • Cash-free Banking APIs work 24×7.
  • It enhanced the visibility of cash flow with real-time capabilities.
  • Reduce administrative hurdles by managing your finances like applying for a business loan, checking your creditworthiness, and more.
  • It allows you a single view of all your finances while being able to control, track, and analyse all financial movements, all in one place.


The API banking services offers access to the core banking data, in a way, helps to remove hurdles between businesses. This helps in the overall growth of the financial industry, along with improving the quality of services available.
API banking services are expected to get more popular in the future. If you run a business, get in touch with a reputed bank who offering such services that would benefit you.

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