More than 9 in 10 financial sectors accept that open banking is vital to their organization. The demand for fast, hassle-free, and personalized banking and financial services among customers is driving the rapid adoption of open banking. However, nearly 50% of banking customers fear the security of open banking.
For open banking to function, APIs are critical as they help create connectivity between different stakeholders for the transfer of financial data. Banks and financial institutions give third-party service providers/ fintech companies access to customers’ personal and financial data to develop innovative services and products.
Despite the regulatory frameworks and compliance requirements, using APIs widens the attack surface and increases security risks. How can you overcome them?
This article lists key best practices for API security in open banking to help manage and minimize these risks.
The best practices for API Security in open banking
Go beyond the traditional methods and best practices for API security
Open banking does define security guidelines and best practices for API security. However, these basic measures, traditional techniques, and legacy tooling are failing. The basic guidelines and frameworks focus only on authentication, authorization, and encryption which are basics for any cybersecurity program, and WAFs and API Gateways, which can only act as low-level barriers.
But these don’t provide holistic security against all kinds of attacks and are ineffective against the ever-evolving and increasingly complex open banking security challenges.
In securing APIs, the best practices and methods must be as dynamic and sophisticated as the threats and challenges. You must leverage fully managed API security solutions and tools that combine the power of the latest technologies, like:
- Self-learning AI
- Behavioral analysis
- Security analytics
- Cloud computing
The solution should be backed by certified security professionals with domain expertise. This way, you can secure open banking APIs against all known, logical, and emerging threats.
Further, make sure that you are choosing tools and solutions that are API-specific and not just general security tools. This is important because API vulnerabilities, security risks, and threats are unique and complex, necessitating custom-built tools for APIs.
Security by design
Banks and financial institutions must stress the need to develop secure APIs using secure components and frameworks. It should incorporate security best practices during early development stages and continuously test APIs to fix flaws.
Discovery and inventorying are key
Another critical API protection best practice is the effective discovery and inventorying of open banking APIs. You must have full, real-time visibility into all your API endpoints and the infrastructure to effectively protect against attacks. You need to uncover all your shadow, zombie, and rogue APIs that run without your knowledge to protect against API attacks that are orchestrated using them effectively.
To this end, you need an automated API scanner that helps you discover all your API endpoints, regardless of the growing number of APIs or the complexity of your architecture. But don’t stop with discovery; keep documenting and updating your API inventory. Understand, at a granular level, if the APIs only perform the intended functionalities, the permissions granted, and so on.
Adopt a risk-based approach to security
Often, organizations don’t know their risk profile and tend to focus more on the promoted risks – the ones in the news or popularly talked about in cybersecurity circles. But their actual risks may be completely different, and you may not be effectively securing their open banking APIs against those.
So, you must think like an attacker to understand your unique risk profile and build your open banking API security program, policies, and mechanisms accordingly.
Implement zero trust policies
Be very stringent about your authorization, authentication, and access controls. Implement advanced, multi-layered, zero-trust policies to ensure that only verified, authorized users have access to your banking and financial services, keeping attackers away and securing your legitimate users.
Identifying and securing vulnerabilities, gaps, and misconfigurations
This is another key best practice for API security in open banking. Vulnerabilities, gaps, and misconfigurations must be proactively identified and secured using instant virtual patching or permanent fixes to prevent exploitation.
Intelligent scanning tools combined with fully managed WAAP (Web Application and API Protection) / next-gen WAF help you do so. Further, comprehensive pen testing helps to unearth logical and unknown vulnerabilities that automated tools often miss.
Stop API attacks in real-time
Another important best practice for API security in open banking is that you must stop all kinds of complicated and sophisticated API attacks in real-time.
To this end, you must leverage an intelligent and fully managed API security solution that combines CDN, advanced DDoS prevention, malicious bot mitigation, WAF, malware protection, and so on. It must identify anomalous behaviours in real-time and stop them through granular traffic monitoring and analysis.
Other API protection best practices
- Check and track compliance
- Minimize false positive
- Don’t forget logging and monitoring
The way forward
While fuelling innovation and reshaping customer experiences in the banking and financial service industry, open banking APIs also increase security challenges and risks. Leverage these best practices for API security to strengthen your security posture.