APIs in Open Banking
Managing Security, Rate Limits, and Developer Experience
Open Banking has transformed financial services by enabling secure, standardized access to customer data through APIs. For developers and architects, this shift brings both opportunities and challenges: how to design APIs that are secure, performant, and developer-friendly, while complying with PSD2 and other regulatory frameworks. Let’s take a closer look at the core considerations when building APIs for Open Banking platforms.
Security First: Meeting PSD2 and Beyond
In the Open Banking ecosystem, security is non-negotiable. APIs must be designed to comply with PSD2 requirements, especially Strong Customer Authentication (SCA) and secure communication protocols.
OAuth 2.0 + OpenID Connect: These are the industry standards for handling third-party authentication and authorization, ensuring banks can delegate access securely.
Mutual TLS (mTLS): Adds another layer of trust by ensuring both the client and server authenticate each other.
Encrypted Payloads: Sensitive financial data should be encrypted at rest and in transit, often with payload signing for non-repudiation.
Implementing security controls at the API gateway layer—like token validation, anomaly detection, and DDoS protection—creates a first line of defense against fraud and abuse.
Managing Rate Limits and Throttling
Open Banking APIs are consumed by multiple third-party providers (TPPs), each with varying usage patterns. Without proper throttling, a spike from one consumer could bring down the entire platform.
Rate Limiting: Define per-TPP quotas (e.g., 100 requests per second) to avoid overloading core systems.
Burst Handling: Allow short spikes with leaky-bucket or token-bucket algorithms, then normalize traffic.
Adaptive Throttling: Dynamically adjust limits based on system health and service priority.
Well-designed rate limiting ensures fair usage and helps maintain predictable API performance even during peak traffic events.
Sandboxing Strategies for Developers
A strong developer experience (DX) is critical for the success of Open Banking APIs. Regulatory frameworks often require banks to provide sandboxes for TPPs to test integrations safely.
Mock Data: Provide realistic but anonymized data sets so developers can validate scenarios without accessing real accounts.
Clear Documentation: Use OpenAPI specs and auto-generated docs to lower onboarding friction.
Self-Service Portals: Developer dashboards for key management, metrics, and debugging streamline the integration process.
Sandboxes not only accelerate time-to-market for TPPs but also reduce the burden on bank support teams.
Monitoring and Observability
APIs in Open Banking must be fully auditable, with regulatory bodies often requiring transaction-level logging and complete traceability. To meet these demands, centralized logging is essential so that every request–response cycle can be reviewed during compliance checks.
Alongside this, teams should collect key metrics such as latency, error rates, and usage trends to identify anomalies before they escalate. Coupled with real-time alerting and automated recovery through tools like Prometheus, ELK, or Grafana, these practices ensure resilience and fast remediation.
This depth of observability not only satisfies regulatory requirements but also strengthens trust with regulators and confidence among partners.
A Balancing Act
Building APIs for Open Banking requires a balancing act: enforce strong security aligned with PSD2, maintain high performance through rate limiting, and deliver a seamless developer experience with sandboxes and robust documentation. The success of Open Banking hinges not only on compliance but also on the ability of fintech teams to make APIs scalable, secure, and usable at scale.
At OceanoBe, we’ve seen firsthand that teams who invest in developer-centric design, observability, and security-first APIs are the ones who thrive in this evolving ecosystem.
