Growing Concern On Banks Using Multiple APIs

There rising concern on APIs are been used in the banking industry, it comes with the risk of security breaches. As APIs allow different systems and platforms to communicate and share data with each other, they can also provide a potential point of entry for cybercriminals to access sensitive information.

The most critical API security risks include: Broken object level, user- and function-level authorization, excessive data exposure, lack of resource, security misconfiguration, and insufficient logging and monitoring. The implications of these and other risks are huge.

Sources said, A leading US investment bank is using APIs to help clients monitor customer sentiment and respond proactively based on the insights gathered. Another US bank has an open portal where developers can access and implement financial solutions for customers, such as direct payments or budgeting and planning.

This brings new risks including data leaks, data fraud, and illicit transactions. There is also the possibility that data relating to user account information and settlement instructions will be exposed to the risks of leaks, tampering, and fraud via handling by TPPs.

APIs allow third-party applications to access data and services from banks' systems, which can improve customer experience and foster innovation in financial services. However, if the APIs are not properly secured, they can become a vulnerability that hackers can exploit to access sensitive information, such as account details and transaction history.

Multiple APIs may require complex integration processes that can lead to compatibility issues, system failures, and downtime. Banks must ensure that they have robust testing and monitoring procedures in place to identify and address any integration issues that arise. Banks must ensure that they have strict data privacy policies in place to govern the use and sharing of customer data.

To manage these potential risks, banks must implement a comprehensive API management strategy that includes robust security measures, strict data privacy policies, effective integration and testing procedures, and regulatory compliance.

S Mohini Ratna, Editor, VARINDIA