The Financial Services industry (FinServ) has profoundly impacted the API landscape, continuously inspiring new avenues for innovation. From the groundbreaking introduction of Open Banking by the first UK bank to the exponential growth of the mobile payment industry, FinServ has been the catalyst behind the widespread adoption and ongoing evolution of APIs, transforming them into essential components of our daily lives.

While this symbiotic relationship between FinServ and APIs has brought numerous advantages, it has also raised security concerns. With APIs permeating every aspect where financial transactions occur, the responsibility of safeguarding these interactions no longer rests solely on the shoulders of financial institutions. It has become the collective obligation of individuals and organizations worldwide, spanning the development of any application integrating with a financial API.

While FinServ may have spearheaded the API revolution, it is incumbent upon us to prioritize safety and security within this realm. In this blog post, we explore the dynamic fusion of FinServ and APIs, delving into the latest advancements while addressing the critical need to bolster security measures. We examine how FinServ’s innovative spirit has propelled the growth and evolution of APIs while emphasizing the paramount importance of maintaining robust security protocols to protect financial transactions.

Join us as we navigate this exciting landscape, uncovering how we can collectively contribute to a secure and thriving ecosystem within the FinServ and API domains. Let’s embrace the opportunities this revolutionary partnership presents while remaining steadfast in our commitment to ensuring the safety and trust of all individuals engaging with financial APIs.

FinServ Takes the Lead in API Adoption

Recent research highlights FinServ as the frontrunner in API usage. The State of APIs survey reveals that the following industries prioritize API adoption:

• Financial Services (67.1%)
• Software Development (61.2%)
• Manufacturing (60.0%)
• Telecommunications (59.2%)
• Healthcare (55.6%)

Even in 2020, FinServ remained at the forefront of API utilization. According to the second annual RapidAPI Developer survey, the Financial Services industry boasted the highest API usage (68.8%), surpassing even the Technology sector (64.7%).

Exploring the Vast Utility of APIs in the FinServ Sector

Countless are how APIs empower the FinServ industry. Here are just a few examples that demonstrate their ubiquitous presence:

• Payment processing: APIs enable seamless and secure payment transactions, allowing businesses to accept various payment methods and integrate with payment gateways or processors.
• Open Banking: APIs facilitate the sharing of customer financial data between different financial institutions, enabling third-party providers to access account information and initiate transactions on behalf of customers.
• Banking as-a-Service (BaaS): APIs enable non-bank companies to offer financial services by leveraging the infrastructure and capabilities of established banks, allowing them to provide banking functionalities to their customers.
• RegTech: APIs play a crucial role in regulatory technology (RegTech) by enabling compliance solutions that automate and streamline regulatory processes, such as Know Your Customer (KYC) checks and Anti-Money Laundering (AML) verification.
• Authentication for FinServ apps: APIs provide secure authentication mechanisms, such as two-factor authentication or biometric authentication, ensuring the protection of user data and preventing unauthorized access to financial applications.
• Investment apps: APIs empower investment platforms by integrating with financial market data providers, enabling real-time stock prices, portfolio management, trading, and other investment-related functionalities.
• Budgeting apps: APIs allow budgeting and personal finance apps to access transaction data from bank accounts, credit cards, and other financial sources, enabling users to track expenses, set budgets, and gain insights into their financial health.
• Mobile Banking: APIs underpin mobile banking applications, enabling users to perform various banking tasks, including checking account balances, transferring funds, paying bills, and managing financial accounts, all from their mobile devices.
• Mobile Payments (e.g., Venmo, PayPal, CashApp): APIs power mobile payment apps, enabling users to send and receive money, make online purchases, split bills, and conduct peer-to-peer transactions securely and conveniently.
• Online shopping apps (from Rakuten to Amazon and beyond): APIs allow e-commerce platforms to integrate with payment gateways, inventory management systems, and shipping services, facilitating seamless transactions, order tracking, and inventory synchronization.
• Digital subscriptions (including Spotify, Wix, Hulu, and more): APIs enable subscription-based services to manage user subscriptions, process recurring payments, grant access to premium content, and enhance the overall user experience.

Whether you’re an online business handling financial transactions or a traditional bank engaging in digital services, APIs are integral to your operations. They facilitate seamless integration with mobile features, mobile payment apps, online bill payment, and other financial services.

The scope of API technology within the financial industry is limitless, and the mutually beneficial relationship between the two is evident. The advantages include unparalleled agility, growth potential, scalability, and simplicity for all online monetary operations. APIs extend their reach across almost every financial corner of the internet, permeating countless apps where funds are exchanged. APIs are omnipresent from Uber and DoorDash to Candy Crush and Groupon, from Google to grocery apps and Netflix.

Given their significance, it is no surprise that cybercriminals are enticed to breach their security measures. The invaluable role of APIs in the FinServ sector makes safeguarding them a top priority.

Let’s continue to explore the incredible possibilities offered by APIs while remaining vigilant in protecting them from malicious threats.

Unveiling the Challenges of FinServ APIs: Navigating the Security Landscape

While most significant enterprises allocate a substantial portion of their IT budgets towards cybersecurity, there remains a discrepancy regarding the security of APIs within the FinServ industry. According to Deloitte, businesses typically dedicate around 2.15% to 10.14% of their overall budget to IT expenses, with Gartner projecting a 2.4% increase in total IT spending this year. Significant investments are made in enterprise security, which cybercriminals are well aware of. So, why would they target the most heavily fortified door?

APIs, on the other hand, often present a different scenario. They can be quickly deployed, utilizing open-source software, offering a user-friendly and straightforward plug-and-play experience, sparing the need to reinvent the coding wheel (and who wants to do that anyway?). It’s much more convenient to integrate with a financial API that seamlessly connects to a bank, credit union, crypto bank, title loan company, or any other financial service provider. Consequently, this is precisely what we do.

The issue lies in identifying who assumes responsibility for API security at this juncture and what actions are taken to address it. In most cases, the app owner leveraging FinServ APIs bears this responsibility.

However, there appears to be some confusion on this matter. According to EMA research:

• 53% believe that management understands the significance of API security.
• 97% have a plan in place to safeguard their APIs.
• Less than half (46%) believe their APIs are adequately protected.

Something doesn’t quite add up, and therein lies the problem. At this stage of the game, we find ourselves in the API honeymoon phase (perhaps just on the flight home), yet we have yet to grasp the inherent risks involved fully.

Unfortunately, this is not the case for malicious actors who have already recognized the opportunities presented by these vulnerabilities.

Let’s delve into the challenges surrounding FinServ APIs, exploring the evolving security landscape and unveiling strategies to address these risks head-on. It’s time to heighten our understanding, fortify our defenses, and ensure the protection of our FinServ ecosystems.

Strengthening the Security of FinServ APIs

The significance of securing FinServ APIs is underscored by research conducted by Salt, an API security vendor, which reveals alarming statistics:

• 78% of attacks originate from seemingly legitimate users who have maliciously gained proper authentication.
• 59% of respondents have encountered production delays due to API security concerns.
• Nearly one-third of organizations have experienced privacy incidents with their production APIs in the past year.

The prevalence of malicious attempts targeting APIs is no secret, and the FinServ sector faces the challenge of balancing growth with robust security measures.

A prime concern arises within rapid development environments, where the presence of “zombie APIs” often goes unnoticed. As testers move on to new projects, these latent APIs remain connected to critical systems and data without adequate oversight. Should a hacker stumble upon these unmonitored APIs, they can exploit unpatched vulnerabilities, jeopardizing the API and everything interconnected.

The exponential growth of Open Banking, mandated in the UK and across Europe, has propelled the continued ascent of APIs. Wherever financial apps are found, APIs are sure to follow.

As FinServ takes the lead in API usage, it becomes imperative for banks and associated apps to recognize the inherent risks and prioritize the security of their APIs as rigorously as they secure financial data itself – because, in essence, that is precisely what they are protecting.

Together, let us fortify FinServ APIs’ security and ensure our financial ecosystem’s seamless functioning.