API banking is the practice of offering banking functions, such as opening accounts, checking balances, reading transactions and sending payments, to other software through application programming interfaces (APIs) instead of only through branches, websites or the bank's own app. The interfaces themselves are usually called bank APIs, and the full explanation of how they work, who uses them and how they are secured is in the Bank API entry.
API banking takes two broad forms. In the first, a bank opens up access because a regulator requires it, as with open banking rules in the UK and the European Union, where licensed third parties can read account data or start payments with the customer's consent. In the second, the bank sells access commercially, letting fintech firms, retailers and software platforms build accounts and cards into their own products, a model known as banking-as-a-service.
The phrase is also used inside large companies for corporate treasury connections, where a business links its accounting or treasury system directly to its banks to fetch statements and release payments without logging in to separate online-banking portals. All of these uses sit under the broader trend of embedded finance.