Have you ever been curious about how your wallet app gets the money from your bank account? Or how your credit card gets approved while shopping on Amazon? APIs are the answer to these questions. APIs are like bridges that allow different software to communicate and exchange data. For instance, a personal finance app can use an Open Banking API to connect to the customer's bank and check their balance. According to , at a global level, 75% of the top 100 banks have made public APIs available in 2022. According to , only 22% of the banks have established their API platforms by 2021. And nearly 39% were working on installing them. It suggests that using API for data and service sharing is still a work in progress but has increased significantly. The explosion of banking APIs research by McKinsey Deloitte APIs are essential when two platforms are incompatible because they speak different languages. An API can act as an interpreter to facilitate communication between them. Furthermore, APIs allow for secure data exchange without revealing the underlying business logic, which is crucial for financial security. While sharing financial data is necessary, it's equally important to keep the inner workings of the financial system confidential. There are three types of banking APIs: ●	Partner APIs for a specific set of third-party companies to solve a common problem. ●	Private APIs are created within the banking institution to improve the operations of their banking services. ●	Open Banking APIs, which have become more prevalent, allow banks to share their data with third-party companies. Improved financial services for customers and third parties are possible with banking APIs. In today's world, financial services are more interconnected than ever before. To provide better customer service, banks, mobile apps, lenders, payment processors, and credit card companies work together. Fintech has grown exponentially and is expected to reach worldwide by 2022. Governments worldwide are also taking the initiative to implement Open Banking. In the UK, s use it. Additionally, predicts that cloud technology will be a significant feature in the world's top 500 companies by 2030. a value of $26.5 trillion 297 companies and 3 million consumer McKinsey APIs have created an uplifting environment for both banking institutions and fintech companies. How fintech benefits from banking APIs A single API can help in developing multiple products and services. It means that the costs of creating various features and functionalities from scratch will drop significantly. And even if the usage of an API may have a certain fee, it is still less costly than maintaining the infrastructure and integrations of complex functionalities needed in the fintech application. Reduce overall costs The financial sector is a heavily regulated industry. APIs can aid in complying with regulations such as GDPR and PSD2 by allowing government agencies and regulators access to their data. This resolves the issue of privacy and security when sharing sensitive information with outside parties. Moreover, APIs are vital for many complex compliance processes, such as Know Your Customer (KYC). Finally, APIs can streamline the process by automating processes like compliance checks and data governance. Ensure regulatory compliance APIs improve the customer experience while also ensuring the security of users' data and compliance with regulations. By streamlining development, APIs enable the delivery of high-quality features to users in a timely manner. Additionally, fintech services become more affordable due to reduced development costs. Enhance customer experience With APIs powering the entire financial sector, many companies have started adopting API security strategies. And there are good reasons for this strategic choice; attacks against APIs are increasing yearly. Poor API security may outweigh fintech API benefits The by Salt Security indicates “a 400% increase” in API attacks. With so many API security incidents, “it’s no surprise that 48% of survey respondents say that API security has become a C-level discussion.” Q1 2023 State of API Security API attacks come in many different forms, but they all have one common goal - to steal or manipulate data. The most common types of API attacks are: ●	DoS and DDoS attacks, where the attacker sends massive requests to the API to overwhelm it and prevent legitimate users from accessing it. ●	SQL injection attacks, where the attacker tries to gain unauthorized access to databases by injecting malicious code into database requests. ●	XML External Entity (XXE) attacks when the criminal tries to access files on the server or other external services using specially crafted XML documents. ●	Cross-site Scripting (XSS) attacks occur when threat actors inject malicious scripts to steal sensitive financial data or gain unauthorized access to the API functionalities. ●	Brute force attacks using automated tools to guess the correct access credentials and gain unauthorized access to banking systems. ●	Cross-site Request Forgery (CSRF) is when the attacker lures legitimate banking customers into clicking a specially crafted phishing link to make unauthorized requests to the API on behalf of the attacker. ●	Man-in-the-middle (MITM) attacks occur when the threat actor intercepts the API traffic to access and compromise financial information. Building secure fintech APIs is the foundation of providing a safe space for customers and businesses alike. Banks and fintech organizations should consider the following: Tips for protecting fintech against API attacks Eliminate business logic vulnerabilities Business logic flaws are the top security risk in apps and APIs. refer to exploiting the authorized operation flow of an application to cause adverse effects on the organization. Cybercriminals might exploit a business logic flaw to access the API's back-end systems, leading to a data breach or other nefarious activity. Business logic flaws may include hardcoded credentials, insecure direct object references, dynamic SQL statements, or loosely defined business processes. Business logic vulnerabilities Use strong authentication and authorization Authorization and authentication vulnerabilities rank as the most common API vulnerabilities on the list. Enforcing robust authentication and authorization mechanisms should be a top priority for traditional financial institutions and innovative FinTech startups. Avoid using easy-to-crack or bypass mechanisms. Instead, opt for protocols like FIDO that validate the customer identity and add an extra layer of security with phishing-resistant multi-factor authentication (MFA). OWASP API Security Top 10 Segregate your data Many applications make it easy for hackers to find and steal data by keeping everything together in one extensive database rather than segregating sensitive data into different entities. Securing a system is much easier if you break up your data and apps. Enforce TLS/SSL for API communications SSL communication adds another layer of security by ensuring all traffic is encrypted and no unauthorized third parties can read data in transit - even if it's intercepted. Invest in raising employee security awareness Financial organizations should educate their employees on how to identify an API attack and what steps they can take to prevent it from happening. Ensure your employees know the dangers of API attacks and how to protect themselves. Another great way to prepare is to implement cybersecurity tabletop exercises with the most common API scenarios. Have a tested contingency plan As FinTech continues to gain popularity, the threat of API attacks will only grow. No matter how many protections one has, it is almost impossible to stop all API attacks. It is, therefore, essential to know what needs to be done when an attack does occur immediately to mitigate the damage caused to your organization. APIs are essential building blocks of successful fintech apps. With the increased demand for fintech apps, fintech businesses are proliferating, and the competition is increasing. So, to succeed, the fintech apps need to stand out. Banking APIs and fintech apps are a perfect combination to drive innovation, expansion, and business growth. However, financial services organizations need to embed API security into their tools and business processes to reap the benefits of these tools. Thus, API security becomes the facilitator and differentiator of innovation. Concluding thoughts

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How Secure Banking APIs Simplify Fintech

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Anastasios Arampatzis

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How Secure Banking APIs Simplify Fintech

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Anastasios Arampatzis

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