APIs (Application Programming Interfaces) are the invisible backbone of everything from mobile banking to cryptocurrency exchanges. These powerful interfaces enable transactions to become frictionless, allowing data to be shared in real-time and services to be integrated in new ways across platforms, thereby transforming the way financial services operate and delivering customer value.
But that very interconnectedness that drives innovation also creates new points of risk. As financial institutions increasingly seek to use APIs to deliver cutting-edge services, they have inadvertently created fresh targets for cybercriminals seeking access to sensitive financial data and transaction systems.
As open banking initiatives, embedded finance, and cross-industry partnerships continue to blossom, the API ecosystem across financial services has grown in complexity by orders of magnitude.
Although this evolution is generating enormous opportunities for innovation and growth, it also presents very real security challenges that could be catastrophic if left unaddressed, fueling the demand for robust security to protect customers’ assets, comply with regulations, and maintain institutional trust.
What is Fintech API Security?
Fintech API security refers to the set of security measures, protocols, and technologies used to protect fintech interfaces. It encompasses the unique dimensions of the financial ecosystem, including regulatory compliance, transactional integrity, and the security of sensitive information, creating a multilayered shield against threats to financial services portals that generic API security would miss.
One of the leading forces behind standardization in financial services has been the Open Banking initiative, which requires governments and regulatory bodies to legislate access to Payment and Banking data models, as outlined in the Revised Payment Services Directive (PSD2), across Europe via Open, Secure APIs.
These regulatory frameworks prescribe specific security standards for authentication mechanisms, mechanisms of consent for data sharing, and technical standards, forming both a compliance obligation and baseline security guardrails for financial institutions operating in an increasingly interconnected ecosystem.
Why Astra is the best in API Pentesting?
- We’re the only company that combines artificial intelligence & manual pentest to create a one-of-a-kind pentest platform.
- Runs 120+ test cases based on industrial standards.
- Integrates with your CI/CD tools to help you establish DevSecOps.
- A dynamic vulnerability management dashboard to manage, monitor, and assess APIs your web app consumes.
- Conduct 2 rescans in 60 days to verify patches.
- Award publicly verifiable pentest certificates which you can share with your users.
- Helps you stay compliant with SOC2, ISO27001, PCI-DSS, HIPAA, etc.
- Trusted by the brands you trust like Agora, Spicejet, Muthoot, Dream11, etc.
Essential Pillars of Fintech API Security
Authentication and Authorization
Strong authentication and authorization are key components of security for fintech APIs.
These include the use of relevant mechanisms such as OAuth 2.0 and OpenID Connect that enable limited access, securely managing credentials, multi-factor authentication to ensure proof of identity, certificate-based mutual TLS for the identification of both client and server entities, and short-lived access tokens with limited scope to minimize the impact in case of compromise.
Data Encryption and Integrity Protection
With a financial API, data requires a whole new level of confidentiality and integrity, both in transfer and throughout its lifetime, concerning each transaction.
This means that TLS encryption must be enabled for every API invocation, including sensitive data and transaction data, which is digitally signed in transit. Additionally, a strict key management policy must be implemented for encryption keys, covering generation, storage, and rotation as necessary.
Input Validation and Output Encoding
Injection mitigations protect the API from malicious inputs. Input validation limits the amount and type of data that users can send to or modify through the API.
Validations provide strict schema validation on every request to the API to make sure that only what is meant to be sent to the API will be sent, parameter filtering so that unexpected or potentially dangerous input that is not directly useful to the API functionality can’t pass through, content security policies that dictate what can be processed.
Abuse Prevention and Rate Limiting
There are multiple defensive measures that we can use to protect the financial APIs from automated attacks and service disruptions.
This includes request throttling, which slows down the frequency of API calls from any given source; behavioral analysis to identify abnormal access patterns; bot detection to separate real users from automated attack tools; and graduated response systems that apply progressively more severe countermeasures as suspicious activity escalates.
Logging, Monitoring, and Anomaly Detection
Visibility and rapid-response features require a combination of centralized logs that contain detailed records of every API transaction, real-time monitoring to observe traffic patterns continuously, and AI-powered anomaly detection to flag deviations from expected behavior.
Additionally, direct integrations with the incident response team enable an immediate remediation process should threats be detected.
Benefits of API Security for Fintech Companies
Deploying comprehensive API security not only helps fintech organizations prevent breaches but also offers numerous far-reaching benefits. A strong security posture drives innovation, fosters trust, and enables competitive differentiation across a more interconnected financial services ecosystem.
Confidence by Partner Integrations
Investing in API security and governance enables fintech companies to scale their partner ecosystem without scaling their risk. A strong API security foundation allows you to move quickly on business development, leveraging a wide range of third-party services, payment processors, and partner platforms that trust your API design and implementation approach.
These new security-enabled connectivity gives organizations the freedom to create value through partnerships and not worry about the vulnerabilities they might bring.
Preparedness for Regulatory Compliance
Data protection, privacy, and system integrity regulations continue to propagate in financial services. Strong API security not only enables compliance with existing regulations, such as PSD2 and GDPR, as well as national financial regulations, but also prepares organizations to respond to new compliance frameworks as they emerge.
By taking these proactive measures, companies can limit development costs related to compliance issues and reduce the risk of regulatory fines that can harm their bottom line and reputation.
Protection of Customer Data in a Better Way
Data breaches in the financial services sector can be disastrous, as both customers and their personal and financial information may be compromised. Robust API security protects this sensitive data end-to-end from collection and processing to storage and transmission.
Protection against unauthorized access and data leakage secures not only customer assets but also their identities and privacy.
Decrease Costs of Security Incident Response
Costs associated with a security breach can run into millions of dollars, encompassing more than just immediate technical remediation. Organizations that invest in preventive API security significantly reduce the risk of incidents that require expensive emergency remediations, forensic investigations, legal counsel, and potential regulatory penalties.
Strong monitoring and threat detection capabilities ensure that when issues do emerge, they are detected and contained before significant damage is done, thereby reducing both economic loss and operational downtime.
Promotion of Open Banking Initiatives
Open banking is reshaping the financial industry, and at its heart lies secure APIs. Robust security enables financial institutions to confidently interact with open banking ecosystems, where consumers’ data must be shared securely with third-party providers (TPPs) that have been granted access by the consumers.
This security infrastructure enables organizations to leverage open banking opportunities while maintaining control over how their services and data are accessed and utilized.
Common API Attacks in Fintech
| Attack | Summary | Mitigation |
|---|---|---|
| Authentication Bypass | Exploits in login mechanisms let attackers impersonate users and access sensitive financial systems. | Enforce multi-factor authentication, use rate limiting, validate token integrity, and test authentication logic. |
| Man-in-the-Middle Attacks | Attackers intercept API communication to steal credentials, alter data, or inject fraudulent transactions. | Use TLS everywhere, enable certificate pinning on clients, and monitor for DNS spoofing or unexpected traffic routes. |
| Broken Object Level Authorization | APIs fail to verify if a user has access to a specific object, allowing unauthorized data manipulation. | Implement object-level authorization checks on the server side for every request, regardless of authentication status. |
| Mass Assignment | APIs expose internal fields by auto-binding client input, enabling attackers to change protected data. | Use allowlists for field binding, avoid auto-mapping user input, and explicitly validate all incoming data. |
| Business Logic Exploitation | Legitimate features are misused in unexpected ways (e.g., race conditions) to bypass controls or extract funds. | Design with misuse in mind, validate workflows, implement transaction integrity checks, and conduct logic-based penetration testing. |
Authentication Bypass
Attackers exploit vulnerabilities in the authentication layer and gain access to expense systems. These attacks not only involve credential stuffing, token theft, session hijacking, and flawed authentication logic but also enable attackers to masquerade as legitimate users and access sensitive financial information or execute unauthorized transactions.
Man-in-the-Middle Attacks
Man-in-the-Middle attacks occur when attackers intercept the communication between a client and an API endpoint, allowing them to access or modify transaction data.
The attackers can impersonate the user and the financial service by injecting themselves into the conversational exchange, allowing them to harvest credentials and forge transaction information, or even introduce fraudulent data, because both parties are under the impression they are talking directly to each other.
Broken Object Level Authorization
Broken Object Level Authorization occurs when an API fails to properly verify whether the authenticated user has legitimate permission to access or manipulate the specific object they are requesting, often by relying solely on the object identifier without performing proper authorization checks.
Mass Assignment
Mass assignment vulnerabilities occur when an API automatically binds client-provided input to internal data models without proper filtering, allowing attackers to modify object properties that aren’t explicitly allowed (allowlisted), potentially overwriting sensitive data that should be protected.
Business Logic Exploitation
Attackers exploit approved API features in unexpected sequences or combinations to achieve undesirable outcomes.
Not all attackers will send fraudulent transactions; some will exploit transaction or block timing to create race conditions, reorder operations to bypass checks, or identify edge cases specific to financial calculations that can enable them to gain unauthorized financial access by exploiting the system.
Key Challenges in Fintech API Security
Third-Party API Integrations Management
The financial ecosystem depends on the interoperability of different providers and services. This creates vulnerabilities in the supply chain for each new connection. These changes introduce additional technical risks as financial institutions engage with external service providers.
Critical considerations include ensuring that third-party security practices are vetted by organizational best practices, the lack of visibility into partner facilities and systems, applying security uniformly across all integrations, and adhering to data flow specifications through potentially multiple jurisdictions of party-connected systems.
Legacy System API Exposures
Banking infrastructure typically consists of mission-critical legacy core systems that are several decades old, alongside modern API layers. This poses major security issues as organizations need to ensure these legacy systems can operate safely in conjunction with new API technologies.
The API layer is a standard modern element in banks and other financial infrastructures that must connect with much older core systems.
This has many areas of the security landscape where legacy systems were developed without the hindsight of what truly secures a real system or limited audit capabilities, and almost always have accumulated several decades of security technical debt, which only piles on from the many generations of application development.
Microservices Architectures
Adopting cloud-native architectures has divided applications into dozens or hundreds of small services. Each of those services has specific concerns and an attack surface. Modern fintech applications utilize distributed microservice designs, introducing the security complexities they bring.
This widens the attack surface between each of the service endpoints, adds a layer of complexity from a service-to-service perspective, treats security as a “hot potato” (where the responsibility tends to shift across different teams), and makes it difficult to maintain a consistent security posture across an entire environment.
Real-time Threat Detection
Adding security checks without inducing latencies is a major technical challenge. Financial APIs are handling massive volumes of time-consuming transactions that are difficult to monitor for security.
This demands security with minimal process latency, the ability to distinguish between high-volume legitimate activity and a high-volume attack, and the capacity to operate with minimal throughput analysis before allowing transactions to proceed, a good balance on the alerting side between false positives / cognitive overhead vs letting through a legitimate attack.
Security vs. Developer Experience
Security requirements often appear in direct conflict with developer goals for productivity. Finding the correct balance is crucial for both security and innovation.
Organizations can mandate security controls (with exceptions for risk-based cases) without making them burdensome, provide secure development frameworks, integrate security testing as a standard element of the development pipeline, and establish a gold standard of financial-specific security requirements for developers to address without being overwhelmed.
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Best Practices for Fintech API Security
API Gateway Protection Implementation
An API gateway acts as a middle layer, creating a single entry point that manages all API-based traffic. API gateways can help enforce consistent authentication and authorization policies, applying security to all endpoints, monitoring traffic patterns for suspicious activity, and managing API versioning and lifecycle.
By decoupling these API transactions from this managed layer, it provides financial organizations greater visibility and control over their API ecosystem.
Extensive API Documentation and Security Protocols
Through investigations, testing, and documentation, security can be maintained throughout the entire lifecycle of the API. This involves specifying detailed API specifications in accordance with standards such as OpenAPI, defining security specifications for all endpoints, outlining data handling and privacy expectations, and providing implementation guidelines to developers.
API Security Testing and Vulnerability Scanning
It is essential to find security issues before they are exploited. This includes embedding the automated security scanner as part of the build pipeline during development, scheduling periodic penetration tests of production APIs, executing fuzz tests to uncover unexpected execution paths in APIs, and testing for business logic vulnerabilities that narrowly automated tools may miss.
API Access in a Zero Trust Architecture
Modern API security measures adopt a zero-trust philosophy where no API request is considered trusted by default. Zero Trust Security is a trust model that assumes every request is hostile and treats any API interaction as untrusted by default.
It adopts a principle of least privilege approach to access policy, based on risk, shifting from a network-based to an identity-based security model.
Continuous Security Validation
Security is not a one-time, set-and-forget endeavor, and testing controls at regular intervals is a crucial part of that puzzle. As we schedule periodic rounds of security assessments and compliance checks, we also run security regression tests automatically to ensure there is no backsliding.
We monitor APIs for continuous policy compliance and implement chaos engineering principles for security testing, ensuring that services are fault-tolerant in the face of an attack. Security must constantly adapt to the evolution of both threats and the technologies themselves.
How can Astra help?
Astra Security offers fintechs tailored solutions for protecting financial APIs, addressing the unique security challenges they encounter. Our unique hybrid automation and manual penetration testing approach provides more comprehensive coverage against your financial APIs than any other tool on the market.
Our platform is built on industry standards, with over 120 test cases running, and integrates directly with your CI/CD tools to enable DevSecOps. It provides a dynamically maintained vulnerability management dashboard that monitors all APIs called by your applications.
We conduct two rescans within 60 days, assist in verifying patches, and then publish public, verifiable penetration test certificates for you to share with customers, helping you meet compliance requirements with key regulations such as SOC 2, ISO 27001, PCI-DSS, and HIPAA.
Astra Pentest is built by the team of experts that helped secure Microsoft, Adobe, Facebook, and Buffer
Final Thoughts
One of the primary focus areas for any fintech organization has become financial APIs’ security. As economic systems become increasingly interconnected and cyber threats become more sophisticated, API security is no longer an option.
It is a fundamental business imperative. Organizations that prioritize and invest in securing their financial APIs will be able to develop and deliver innovative and secure solutions to customers, while building and maintaining customer trust and meeting regulatory and compliance requirements.
Astra Security experts have specialized tools & knowledge across the financial industry and ecosystem to ensure scalable security of your financial APIs against today’s dynamic attack surface and evolving threat landscape. We create a security baseline using AI-powered security scanning solutions and manual penetration testing, allowing you to innovate and partner with confidence.
FAQs
What is cybersecurity in Fintech?
Cybersecurity in fintech involves protecting financial services, applications, and data from cyber threats. It ensures secure transactions, safeguards sensitive customer information, and complies with regulations to maintain trust and prevent financial fraud.
How do I provide security to API?
To secure an API, use strong authentication methods like OAuth, implement input validation to prevent injection attacks, encrypt data transmission with TLS, regularly audit access logs, enforce rate limiting, and ensure proper authorization checks for each endpoint.
What is security in fintech?
Security in fintech involves protecting financial systems, data, and transactions from cyber threats. It includes encryption, authentication, regulatory compliance, and risk management to ensure safe, reliable financial services for users.
